Lean Development and Innovation Hitting The Market With The Right Products at The Right Time by Luciano Attolico

Lean Development and
Innovation
Hitting the Market with the Right
Products at the Right Time
Lean Development and
Innovation
Hitting the Market with the Right
Products at the Right Time
By
Luciano Attolico
A PRODUCTIVITY PRESS BOOK

First edition published in 2019
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© 2019 by Luciano Attolico

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Library of Congress Cataloging-in-Publication Data
Names: Attolico, Luciano, author.

Title: Lean development and innovation : hitting the market with the right products at the right
time / Luciano Attolico.
Description: New York, NY : Routledge, 2018. | Includes bibliographical references and index.
Identifiers: LCCN 2018021197 (print) | LCCN 2018021979 (ebook) | ISBN 9781351059596 (e-Book) |
ISBN 9781138481817 (pbk. : alk. paper) | ISBN 9781138481831 (hardback : alk. paper)
Subjects: LCSH: New products. | Lean manufacturing. | Technological innovations.
Classification: LCC TS170 (ebook) | LCC TS170 .A88 2018 (print) | DDC 658.5/75--dc23
LC record available at https://lccn.loc.gov/2018021197
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Contents
Foreword ..................................................................................................xiii
Preface..................................................................................................... xvii
Acknowledgments ................................................................................xxiii
Author ..................................................................................................... xxv
1 Lean Product-Process Innovation and Long-Term Thinking .......1
1.1 A Strategic Question: Excellence in the Long-Term or
Mediocrity in the Short-Term? ............................................................2
1.2 Innovating to Achieve Success ...........................................................5
1.3 From Lean Management to the Lean Development
and Innovation System .......................................................................8
1.3.1 Lean Thinking..........................................................................8
1.3.2 Historical Background of Lean Thinking ...............................9
1.3.3 What Can We Learn from the Toyota Model? .......................10
1.3.4 Wastes in Product and Innovation Processes .......................12
1.4 Types of Waste in the Innovation Process ...................................... 15
1.5 Process Kaizen in Non-Manufacturing Processes ...........................20
1.5.1 Waste “Suffered” and Waste “Generated” .............................22
1.6 Why Invest in a Lean Development and Innovation System? ........23
1.6.1 Integrating People, Processes, and Tools ..............................27
1.7 Each Situation Has Its Own Peculiarities ........................................29
1.8 Summary of Key Points in Chapter 1 ..............................................30
Resources ..................................................................................................31
Notes .........................................................................................................31
2 Processes: The Way We Work to Add Value ...............................33
2.1 When Processes Are Real Solutions to Problems ............................33
2.1.1 Do Many Things at the Same Time or Arrange Project
Activities into a Sequenced Flow? .........................................34
v
vi ◾ Contents
2.1.2
Pay Attention to Small Signals and Accumulate the
Knowledge ..........................................................................35
2.1.3 Balancing and Synchronizing Work Loads from a
Value Stream Perspective ....................................................36
2.1.4 How Can We Ask for the Materials and Information
That Are Needed When They Are Needed?.......................37
2.1.5 Cause and Effect ..................................................................37
2.2 Make the Customer the Center of Attention: Concept Paper .........38
2.2.1 Forming the Project Team and a Sample
Concept Paper Format ........................................................41
2.2.2 Who Guides the Process? ....................................................41
2.2.3 Product and Market History ................................................42
2.2.4 Who Will Use Our Products? ..............................................42
2.2.5 Classification of Product Features .......................................43
2.2.6 How Can We Understand What the Customer Wants? ......44
2.2.7 Radical Sharing ....................................................................45
2.2.8 The Importance of a Single Unified Vision ........................45
2.2.9 One Product or a Family of Products? The Right
Choice Could Bring Big Benefits (and) Savings .................46
2.2.10 How Can We Standardize the Use of Product
Components to Reduce the Final Cost? ..............................48
2.2.11 How Can We Establish Goals at the Beginning of
the Project? ..........................................................................48
2.2.12 Why Choose One Goal Value and Not Another? ...............50
2.2.13 Are These Objectives Really Achievable? ...........................52
2.2.14 What If We Are Already the Market Leader? ......................53
2.3 Concentrating Efforts at the Beginning of a Project .......................54
2.3.1 When Does a Project Really End? .......................................56
2.3.2 Starting Out Already Late ....................................................57
2.3.3 The Problem of a Sprint Start .............................................57
2.3.4 Iterative Models and Convergent Models of Development .... 59
2.3.5 Kentou and Set-Based Concurrent Engineering
in Practice ............................................................................60
2.3.6 Development Teams Based on Modules ............................62
2.3.7 Reuse of Existing Solutions and Knowledge of
Previous Critical Areas ........................................................63
2.3.8 Simultaneous Convergence of Different Modules ..............64
2.3.9 The Case of the Prius ..........................................................66
2.3.10 Group Brainstorming? No Thanks ...................................... 67
Contents ◾ vii
2.3.11 What Happens if the Solutions Are Incompatible

with Each Other? ................................................................. 67
2.3.12 Excessive Harmony Does Not Yield Good Products .........69
2.3.13 From a Good Product to an Excellent One ........................69
2.3.14 Two Small Secrets ................................................................70
2.3.14.1 First Secret ............................................................70
2.3.14.2 Second Secret .......................................................71
2.3.15 When the Supplier Teaches Something to the Client:
The Denso Case ..................................................................72
2.3.16 Problem-Solving Resolves Everything… But How
Much Does It Cost? .............................................................73
2.3.17 When Simple Steps Yield Solutions That Avoid Serious
Consequences......................................................................75
2.3.18 It Is Advisable to Make Modifications Early On .................77
2.3.19 When a Limited Budget Makes No Provision for
Additional Expenses............................................................78
2.4 Value Stream Mapping to Understand the Real Current State
and Creatively Envision a Desired Future State ..............................78
2.4.1 Value Stream Mapping in Practice ......................................83
2.4.2 The Steps of a Value Stream Mapping Event .....................86
2.4.3 Why Not Start Immediately with Tried and
Tested Solutions?..................................................................89
2.5 How to Get the Intellectual Juices Flowing without Obstacles
or Interruption ..................................................................................90
2.5.1 The Myth of Multitasking ....................................................91
2.5.2 Queuing Theory and Intellectual Efficiency ......................92
2.5.3 The Eight Principles of Flow in Intellectual Activities .......94
2.5.3.1 Level the Arrival of Work ......................................94
2.5.3.2 Minimize the Number of Activities in Process .....95
2.5.3.3 Reduce the Size of Activities .................................96
2.5.3.4 Establish a Regular Cadence .................................97
2.5.3.5 Plan Results and Not Activities .............................99
2.5.3.6 Pull Planning ..........................................................99
2.5.3.7 Avoid Overloading ............................................... 101
2.5.3.8 Minimize Interruptions ........................................ 101
2.6 Resource Leveling in a Complex Project .......................................103
2.6.1 A Model for Leveling Workloads between People ...........103
2.6.2 What Happens if There Are Just a Few of
Us or I Am on My Own? ..................................................105
viii ◾ Contents
2.7 Lean Project Management: The Art of Surfing Applied

to Projects .......................................................................................106
2.7.1 Taking Project Times and Deadlines into Account ............106
2.7.2 Is the Right Information in the Right Place at
the Right Time? .................................................................... 107
2.7.3 Value Creating Management ................................................108
2.7.4 Who Promotes the Principles of Flow on a Project? ..........109
2.7.5 How Pull Planning is Put into Practice—A Real Case ....... 111
2.7.6 Detailed Planning of the Flow of Materials and
Information: Fundoshi Scheduling ...................................... 113
2.7.7 The Management System and Review of the
Whole Project ....................................................................... 115
2.8 Standardization and Creativity: The True Strength of a
New Product ................................................................................... 117
2.8.1 The Basis of Standardization: Knowing How to Use
the Data and Knowledge in Our Possession ...................... 119
2.8.2 How Do We Collect Data for a Trade-Off Curve? We
Make Better Use of the Way We Already Do Things
and the Data Already Available to Us ................................. 119
2.8.3 Standardization of Components, Reuse of Know-How,
and Corporate Profit ............................................................120
2.8.4 Releasing Energies to Make a Real Difference ................... 121
2.9 Summary of Key Points in Chapter 2 ............................................122
Resource ..................................................................................................124
Notes .......................................................................................................124
3 People: The Engine for Creativity at the Heart of
Long-Term Success ...................................................................125
3.1 There Can Be No Innovation without People ...............................125
3.1.1 Are Corporate Productivity and People’s Well-Being
Compatible? ..........................................................................126
3.1.2 What Does It Mean to Become Lean? The Principles of
Lean Leadership ...................................................................128
3.2 Coordinating and Integrating Development through the Chief
Engineer System .............................................................................130
3.2.1 Matrix Structure? .................................................................. 131
3.2.2 What Skills Should a Chief Engineer Have? ........................134
3.3 Cross-Functional Cooperation to Effectively Develop
New Products ................................................................................. 135
Contents ◾ ix
3.3.1 Who Makes the Decisions? ..................................................137

3.3.2 What About the Other Departments
Not Strictly Related to the Product?.....................................137
3.4 The Value of Competence..............................................................138
3.4.1 Example: The Typical Development and
Career Path of a Toyota Engineer .......................................139
3.4.2 What Is the Best Way to Develop Human
Resources in Your Company? .............................................. 140
3.4.3 Personnel that Leave and Enter into the Company ............ 141
3.4.4 School, Apprentices, and Artists.......................................... 142
3.4.5 Superstars or Normal, but Competent People? ................... 142
3.4.6 Specialists or Generalists? .................................................... 143
3.5 Suppliers or Partners: Mirage or Reality? ....................................... 143
3.5.1 How Should We Choose Our Supplier-Partners? ................144
3.5.2 Different Categories of Suppliers......................................... 145
3.5.3 How Do I Know If It Is the Right Supplier for Me? ........... 146
3.6 Constant Learning and Continuous Improvement ........................ 149
3.6.1 Big Initiatives ....................................................................... 150
3.6.2 Learning and Continuous Improvement: Visible
and Invisible Knowledge ..................................................... 150
3.6.3 Making the Intangible Tangible........................................... 151
Summary of KeyPoints in Chapter 3 ...................................................... 153
Resource .................................................................................................. 154
Notes ....................................................................................................... 155
4 Tools for a Lean and Innovative Company ............................... 157
4.1 Criteria for Choosing the Right Tools ............................................ 158
4.1.1 Criteria 1: Integration and Ease of Use ............................... 159
4.1.2 Criteria 2: Support of Processes ..........................................160
4.1.3 Criteria 3: Support People ................................................... 161
4.1.4 Criteria 4: Reinforce Standardization ................................... 161
4.1.5 Criteria 5: Enable Organizational Alignment ...................... 162
4.1.6 Criteria 6: Assist Organizational Learning........................... 163
4.2 The Obeya ......................................................................................164
4.2.1 The Effectiveness of Different Means of Communication .... 165
4.2.2 The Importance of Distances ..............................................166
4.2.3 Setting Up an Obeya Room ................................................ 167
4.2.4 Seeing for Yourself ............................................................... 169
4.3 Simplify Communication and Learning with A3 ........................... 170
x ◾ Contents
4.3.1 Summary of the Basic Principles of an A3 Report ............. 175

4.4 Systematic Reflection in Order to Learn from Experience............ 175
4.4.1 When Do We Do It? And Who Should Do It? .................... 176
4.4.2 What Is the Difference between Hansei and
Lessons Learned? ................................................................. 178
4.4.3 Some Practical Examples ..................................................... 179
4.5 Summary of Chapter 4 ................................................................... 181
Resources ................................................................................................ 181
Note .........................................................................................................181
5 Companies That Have Successfully Streamlined and

Innovated Their Product Development....................................183
5.1 Sacmi Ceramics ..............................................................................184
5.1.1 Mature Technology and Market Leadership. The Quest
for Continuous Improvement and Growth .........................184
5.1.2 Value Stream Mapping—Current State ................................184
5.1.3 Hansei ..................................................................................187
5.1.4 Value Stream Mapping—Future State .................................189
5.1.5 Project Start: The Concept Paper ........................................ 191
5.1.6 Kentou .................................................................................. 195
5.1.7 Managing the Project: The Obeya System ..........................198
5.1.8 The “Quick Die Change” Subgroup—Adding
Customer Value ....................................................................198
5.1.9 Conclusions ..........................................................................199
5.2 Laika ...............................................................................................201
5.2.1 Innovation and Lean Leadership as a Reaction to
Economic Crisis....................................................................201
5.2.2 The New Kreos Motorhome Project ...................................206
5.2.3 Coaching and Training ........................................................ 212
5.2.4 Next Steps ............................................................................212
5.3 Sacmi Closures................................................................................213
5.3.1 Cut Costs or Earn More? ...................................................... 213
5.3.2 Current State Value Stream Mapping .................................. 214
5.3.3 Hansei and the Future State Value Stream Map ................. 216
5.3.4 Concept Paper ...................................................................... 219
5.3.5 From Efficiency to Effectiveness .........................................220
5.3.6 The Project Review System and Management of
the Project ............................................................................221
5.3.7 The Kentou Phase and the Design Execution Phase .........222
Contents ◾ xi
5.3.8 Modifications: Are We Sure We Know the Causes? .........225

5.3.9 The Assembly of the Prototype ........................................225
5.3.10 Conclusions ........................................................................227
5.4 Continental .....................................................................................229
5.4.1 Not Enough Time to Develop a New Technology? ..........229
5.4.2 The Problem ......................................................................229
5.4.3 Getting Started: Scoping, Goal Setting, Partner
Selection, and Planning .....................................................230
5.4.4 The First Steps: Analysis of the Current Situation
and Competitive Benchmarking ....................................... 231
5.4.5 Project Review System and Test Activities
Standardization ..................................................................232
5.4.6 Set-Based Concurrent Engineering put to
the Test: The Evaluation Matrix ........................................236
5.4.7 Trade-Off Curves ...............................................................237
5.4.8 Chosen Solutions and Conclusions ...................................238
5.5 PSA—Peugeot Citroen: Applying Set-Based Concurrent
Engineering.....................................................................................239
5.5.1 Introduction .......................................................................239
5.5.2 SBCE Approach..................................................................241
5.5.2.1 Set-Based Concurrent Engineering—
Scoping: What Is Value-Added? Where
Do We Need to Search? ........................................241
5.5.2.2 Set-Based Concurrent Engineering—
Initialization Workshop .........................................242
5.5.2.3 Convergence Phase ...............................................247
5.5.3 Conclusions ........................................................................248
Acknowledgments ..................................................................................250
5.6 Lamborghini ...................................................................................250
5.6.1 Applied Research and Bold Product Innovation ..............250
5.6.2 The Sesto Elemento, a Laboratory of Excellence ............. 252
5.6.3 Frontal Impact Absorption ................................................254
5.6.4 Aventador: The Industrialization of the Product
in Carbon Fiber.................................................................. 255
5.6.5 Building Block Approach ..................................................257
5.6.6 Advanced Composite Research Center .............................259
5.6.7 Innovative Processes .........................................................260
5.6.8 RTM Lambo ....................................................................... 261
5.6.9 Conclusions ........................................................................262
xii ◾ Contents
5.7 The Natuzzi Case—Relaunching a Company Starting from

Its Products .....................................................................................263
5.7.1 The Company and Its History ...........................................263
5.7.2 Today’s Context and Challenges .......................................265
5.7.3 Project Setting and Starting ...............................................266
5.7.4 The New Product Development Process ..........................269
5.7.5 Product Architecture and Platforms ..................................271
5.7.6 Operational Management of Industrial Platforms.............276
5.7.7 Design to Cost: Design for Manufacturing and
Assembly ............................................................................278
5.7.8 Implementation Phase of the New Principles ...................279
5.7.9 Results ................................................................................280
5.7.10 Lessons Learned.................................................................282
5.7.11 Next Steps ..........................................................................283
Resources ................................................................................................284
Notes .......................................................................................................284
Conclusion: The Secrets to Being a Lean, Innovative, and
Winning Company ..........................................................................285
Appendix: Modularity: The Way to Reduce the Total Product
Costs While Drastically Increasing the Industrial Flexibility ........293
Glossary .......................................................................................... 315
Bibliography ...................................................................................323
Index ..............................................................................................327
Foreword
My original study of Japanese automakers back in 1983 focused on sup-

plier involvement in product development, focused on Toyota, Mazda, and
Nissan. All three had similar approaches and were vastly different from
American automakers at the time. The difference simply was one of working
with trusted partners in Japan from the earliest stages of concept develop-
ment to Americans controlling the design internally and treating suppliers
as vendors shopping their wares and competing on price. It was clear even
then that Toyota had a more defined and sophisticated approach to product
development than the other two Japanese companies and that led to me
delving more deeply into Toyota’s system with associates and students, lead-
ing ultimately to The Toyota Product Development System with Jim Morgan
(Productivity Press, 2006). At a high level, what we learned was that Toyota
effectively integrated people, processes, and technology with highly focused
product development projects supporting long-term strategic plans. The
emphasis was on the people—developing them technically, developing their
way of working as teams, developing leaders able to get people aligned
toward common objectives, challenging them to perform at exceptionally
high levels, and treating outside partners as integral parts of the team. We
argued that Toyota’s product development system was one manifestation of
the broader principles I documented in The Toyota Way. These started with
a philosophy of thinking long-term and investing in the future, developing
Lean processes to design in quality from the start, and developing people
and partners to rigorously solve problems and turn what they learned into a
knowledge database for the future.
At the time of our book on product development, there was relatively little
Lean activity in manufacturing organizations beyond the shop floor. In fact,
we argued that starting Lean in the core operations for learning and imme-
diately visible results was an effective strategy. Since then, companies have
xiii
xiv ◾ Foreword
been steadily moving upstream and recognizing that the greatest opportunity
to impact long term cost, quality, and customer satisfaction is in Lean Product
Development (LPD)—or the conception of whatever your product or service
is. LPD consulting has become a cottage industry and extended to other
areas such as agile software development. As consultants developed their
packages and companies wanted something neat and tidy to purchase, LPD
too often became a toolkit to be implemented like a new piece of software.
In parallel with writing books with colleagues, I also have a network of
associates who consult for a living attempting to develop in organizations
the philosophy and culture we have learned from observing Toyota. The
Toyota Way principles form the backbone of our approach. One of my best
consultants, John Drogosz, PhD, has worked particularly intensively on LPD
for almost a decade and one of our clients was Siemens VDO (the automo-
tive division) that had embarked on a transformation to LPD. In the course
of that work, John met Luciano, the author of this book, who at the time
was a manufacturing engineering manager for Siemens VDO in Pisa. He
took our courses through the University of Michigan on Lean and was one
of the bright, rising stars at Siemens who actually practiced what he learned.
Luciano later left Siemens VDO, which was sold off, and has since been
working as a Lean consultant collaborating with John on several projects.
John describes Luciano by saying he is “very passionate about Lean and
clearly knows that it is not about the tools, but more about the culture.”
This is the key lesson we learned from Toyota and one few people seem
to be able to deeply understand. Part I of Luciano’s book is the founda-
tion of LPD and the most important insight: “Lean innovation and long-term
vision.” There is a lot of insight in this simple combination of ideas. Too
many people think Lean is the simple application of tools to eliminate waste
and ultimately standardize the process so it is mistake proof. Applied to
product development, this implies that engineers begin to function as mind-
less robots. Nothing could be further from the truth. What we learned from
Toyota is the key principle of “challenge,” which is to face the uncertainty of
the future environment with confidence and determination to discover new
solutions to solve customer problems. Since product development is work
done today for future products, it must be future oriented, using innovation
to solve problems anticipated in the future—a lofty and challenging goal
indeed. This requires a long-term orientation to invest today for benefits that
may not be achieved for years into the future. In fact, the original project
which led to the first Prius was an investment that would not really pay off
for more than a decade—developing a car for the 21st century.
Foreword ◾ xv
So what does creative innovation have to do with standardization and

Lean processes? The answer starts with your view of how innovation occurs.
If the vision is of the brilliant individual who, unencumbered by any rules or
bureaucracy, hangs out in the lab waiting for moments of insight, then the last
thing you want is to impose standards and a particular process on the creative
people. In fact, in Toyota there is relatively little semblance of Lean in the
design studios, where artists sketch many alternative designs for future cars.
On the other hand, Toyota views most innovation as coming from teams
of people who have deep knowledge in their specialty, working together
toward a common, defined, challenging objective. It happens in stages
through many small innovative ideas and a few big ones. In the develop-
ment of automobiles, a complex system which involves thousands of parts
coming together and which ultimately must be manufactured with high
quality at low cost, there is a tremendous need for communication and coor-
dination across many different people with different knowledge bases…and
there are clear timelines for product launch.
Even in the case of the Prius, in which the vision was a car for the 21st
century and started with a broad concept more than ten years before the
21st century, Toyota used an organized process with clear timelines. The
stages were the blue sky concept, which led to a description of the vehicle
and a full-scale drawing; the development of a concept vehicle for auto
shows; and finally the development of the first production version of the
Prius. Getting the vision right upfront was very important, in this case a fuel-
efficient, environmentally friendly vehicle that felt spacious for an entire fam-
ily. By the time of the development of the first production vehicle it was all
hands on deck meeting challenging timelines to be the first mass produced
hybrid on the market. It required vision, strong leadership, dedicated engi-
neers solving problem after problem, strong communication across many
departments from sales to purchasing to manufacturing to many engineering
specialties, and a long-term vision. The significance of the long-term vision
was that Toyota did not expect to have a blockbuster product on the first try
that made buckets of profits. In fact, the first-generation Prius was primar-
ily for learning—to be improved on in the second generation and so on.
Learning about the core technologies, like high-performance batteries, and
improving on how these core technologies were designed and manufactured
was as important as sales—developing the capability to be prepared to face
the challenges of the 21st century.
So let’s return to LPD. When you have a complex system that involves
coordination and communication of many people in many specialties, you
xvi ◾ Foreword
need well-defined processes, well-defined timelines, clear roles and respon-

sibilities, and strong leadership from a chief architect—which Toyota calls
a “chief engineer.” You also need a way to learn over time, so Toyota has
highly developed knowledge databases owned and updated by engineers
with deep technical knowledge in each specialty area. You also need engi-
neers with the social skills to communicate, listen carefully to new ideas,
consider all disconfirming data, and develop integrative solutions that fit
many points of view, such as sales, purchasing, manufacturing, safety, cost,
quality, and more.
The organized system that brings this together is what we describe as
LPD. The underlying philosophy of LPD is that it requires building a strong
culture, and the specific tools used and human resource practices need to be
evolved in each organization over time. So for example, taking an organiza-
tion with a culture in which professionals do not work effectively in teams or
across functions, do not share knowledge with others or capture it over time,
do not think upstream about the implications of decisions for downstream,
do not plan effectively so that deviations from the plan become the norm,
and generally are working to survive chaos every day will not benefit greatly
from a few tools such as a big room to meet in (Obeya) or problem-solving
forms to fill out (A3). Developing the culture, the deep expertise, the team-
work, the strategic focus, and the ability to deal passionately with uncertainty
and solve difficult problems all require leadership that is patient, thinking
long-term, and has as a top priority the development of people and culture.
Luciano has learned this in the only way possible either as manager or
as consultant and trainer: by studying and then immediately doing and then
studying some more and doing some more. This iterative learning process
deepens your understanding of how to create a system of people, processes,
and technology that can lead your company into the future with products
that truly solve customer’s problems. This is the path to becoming a market
leader and an excellent company. Please take this opportunity to learn from
Luciano’s journey about the power of Lean thinking in innovation and prod-
uct development.
Jeffrey K. Liker, PhD

Professor, Industrial and Operations Engineering, University of Michigan
Author of The Toyota Way and co-author of The Toyota Product
Development System
Preface
My passion has been to build an enduring company where peo-

ple were motivated to make great products. Everything else was
secondary. Sure, it was great to make a profit, because that was
what allowed you to make great products. But the products, not
the profits, were the motivation. […] People don’t know what they
want until you show it to them. That’s why I never rely on market
research. Our task is to read things that are not yet on the page.
Steve Jobs
A few years ago, while reminiscing with my Canadian business partner and
good friend John Drogosz, I realized that I had actually begun to implement
Lean Thinking long before I even graduated or gained work experience in a
multinational company.
I was fifteen at the time, and worked for a restaurant chain where I
was responsible for making sandwiches. The production center distrib-
uted its perishable products to eighteen bars and restaurants dotted around
an exposition and trade fair venue. The biggest problem was supplying
them with the right quantities, while always trying to deliver the highest
quality product.
Without knowing anything about Lean Production, Lean Supply Chain, or
Just in Time, we set up a service plan with min/max inventory levels based
on the previous year’s sales. Then, armed with bikes and full/empty con-
tainers, we continually replenished the bars and restaurants as soon as they
consumed their sandwiches.
A few years later, I was to discover that I had actually applied, to the let-
ter, a system called “Kanban,” a basic technique of one of the pillars of Lean
Production: “Just in Time.”
xvii
xviii ◾ Preface
After my university years, armed with a degree in mechanical engi-

neering and the temptation to pursue an academic career as a researcher,
I realized that I got more enjoyment out of applying certain theories than
studying them. Not by chance I found myself, in 1995, in my first job as
an engineer, handling the Just in Time principles at Magneti Marelli, a Fiat
Chrysler Automobiles Group company. From making sandwiches to a “white
collar” job was a huge step, but the experience in the field had already
begun earlier. However, the real breakthrough came when I began work-
ing beside Masaaky Yutani, an experienced Japanese mentor, formerly with
Toyota. I listened, learned, and began to experiment with applying the
Toyota Production System methods and principles, with a person who had
lived them for years.
After Magneti Marelli, I had my first experience as a consultant, and
worked for almost three years for a well-known international consult-
ing company where I was involved in industrial streamlining projects.
Notably, I worked on a project team in charge of the merger of Case and
New Holland operations between Italy, the United States, France, and
Germany.
Another step came in 2003, and it was to have major consequences for
me. I began handling the development of new products and processes at
Siemens VDO Automotive, where I met John Drogosz and Jeffrey Liker.*
I was part of the launch team of the Lean Transformation program, and
early on the company’s senior management decided we needed help to
guide us through our Lean journey and called on the services of one of the
foremost authorities on the Toyota Production System and Lean thinking,
Jeffrey Liker.
After personally meeting Jeffrey Liker and having read his books, I was
struck by the fact that this man not only talked about the Lean theories,
but he had also helped put them into practice in more than twenty years of
activity with a group of people selected in the United States to promote the
Toyota Way model.
Toyota has gradually built an entire system from scratch. They did
not “copy and paste,” but rather created it within its specific context that
increased the technical and managerial skills of the people to create the
right technical and social model fitting the Toyota Way principles.
* Jeffrey Liker, a professor at the University of Michigan and author of several bestsellers, including:
The Toyota Way, The Toyota Product Development System, and many others. In the bibliography is
the complete list of texts that I have used as references in this book.
Preface ◾ xix
Jeffrey Liker, having seen the Toyota Way in Japan and the United States,
internalized the technical and social model, so much so that he was able to
describe, recount, and teach it to other companies, as well as the neo-Toyota
Americans. John Drogosz worked alongside Jeffrey Liker for over fifteen
years and contributed personally to both the writing of some of his books
and the business applications of the Lean model. During my time at Siemens
VDO Automotive, we created a training program and specific applications
that achieved significant results. Above all for me, it contributed to a pro-
found evolution in the way I conceived and applied the Lean principles I
had already known for more than a decade.
In my career, therefore, it was inevitable that I would find myself in
Japan in late 2004, to visit and study the best Japanese companies, includ-
ing Toyota, Honda, Sony, Bosch Japan, Omron, and Daikin. The experience
was so enlightening that I decided to leave Siemens VDO Automotive a few
years later, in December 2007, to continue to work full time as a researcher,
consultant, and trainer in the areas that, from the beginning of my career,
I have never stopped cultivating in my different jobs: Lean Thinking and
Innovation.
Since that time, I have continued to combine the experiences of my
American colleagues with mine and those of the group of people who are
now part of Lenovys, the consulting firm I founded in 2009.
Lenovys has been ranked in April 2017 by Financial Times among
Europe’s one-thousand fastest growing companies, which have achieved
the highest percentage growth in revenues between 2012 and 2015, accord-
ing to the data of an independent extensive research that covered thirty-
four countries of the European continent focused only on companies with
organic, internally stimulated growth. Lenovys’ clients in these years have
been many and have covered many different industries. Some of them are:
Continental, Lamborghini, Roche, Sacmi, Natuzzi, Nestlè, Heineken, Tetra
Pak, Campari, Danieli, Honda, Johnson Electric, Laika, Lavazza, Lundbeck,
Mahle, Telecom, Solvay, Lucart, and many others. Today Lenovys is the
Italian partner of Liker Lean Advisor, LLC, the successful consulting firm of
Jeffrey Liker that works in product and process innovation for major global
companies such as Caterpillar, Herman Miller, Harley-Davidson, Peugeot,
Hertz, GM, Areva, Schlumberger, and Siemens. Thanks to Jeff and John
and their valuable contribution I developed with my team all the Lenovys
know-how, including the “Impact Innovation” and the Lean Lifestyle®
frameworks, which are explained and referred to extensively in the pages
that follow.
xx ◾ Preface
Why this book, then? Another book on Lean Management?

No. I don’t want to add another theoretical work to the many excellent
books already available on the market.
I have worked for more than twenty years with Italian, European, and
U.S. companies—small, medium-sized, and multinational—and what I want
to do in this book is to condense that experience so as to provide some
ideas for concrete reflection.
I have placed the social and human aspects of the corporate world at the
center of my work and approach. This is the intangible body of know-how
possessed by individuals, which is not deposited in written or formalized
processes, but often determines the success or failure of a company and
of everyone operating in it. The results achieved by a company are largely
determined by the products and services offered to customers. Acquiring
greater effectiveness in the research and development (R & D) process, from
the early phases in the life of a product through its market launch, makes
it possible to gain a competitive edge over the competitors and to ensure
enduring prosperity.
In this book, I have focused on this phase, vital for every company
but often ignored in favor of more operative phases, such as production,
logistics, sales, and many others. These phases undoubtedly drain energy,
attention, and company costs, but often these are the effects and not the
causes of a process that began much earlier: when the product was con-
ceived, when decisions were taken, too many times with little thought,
but drastically influencing, for better or worse, the whole lifecycle of the
product itself.
I hope you will find ideas for comparison, for reflection, and for put-
ting into practice the different perspectives arising from direct experience
over the years of working side by side with hundreds of businessmen and
businesswomen.
Every company I have worked with has taught me something or helped
me see a winning strategy, and I have come to realize that a level of sys-
temic abstraction and a formalization of winning models is possible.
In the following pages, you will discover how it is possible to effect
major changes in a company’s life thanks to the application of “Lean
thinking” in the development of new products and services. Concrete
lessons can be learned from many success stories of companies that have
overcome difficult periods and major challenges thanks to the ability to
innovate with new methodologies and, above all, with different mental
attitudes.
Preface ◾ xxi
By the time you reach the end of the book, you will be “trained” to
quickly recognize the areas of waste that exist in companies, or even in our
own personal lives. You will be able to distinguish activities on the basis
of the level of added value they bring to a product. You will learn to “wear
the spectacles” that show us the reality of a company or of an individual in
a clearer light, enabling a better understanding of how the concept of value
can make the difference between success and the status quo in everyday life.
My aim in this book is to question a number of “paradigms” that we have
perhaps become accustomed to over the years. You will discover, in fact,
how some companies have managed to drastically reduce the time required
to develop their products, and to whittle down costs while increasing value.
Besides the many examples drawn from different national and inter-
national contexts, the book features seven case studies of companies that
were or are Lenovys and Likers Lean Advisors clients, focusing on innova-
tion and product development projects: Sacmi, Laika, Continental, Natuzzi,
Lamborghini, and Peugeot Citroën. The cases are examined in detail, and
from each of them, I believe, you will be able to gather valuable ideas for
your own projects.
The book is organized into the following chapters.
Chapter 1—Lean Product-Process Innovation and Long-Term

Thinking. When value innovation and winning products make the differ-
ence for the long-term success of companies.
Chapter 2—Processes: The Way We Work to Add Value. The importance
of defining processes within a company in order to activate improvement at
all levels, not to accumulate paper in dusty files containing often forgotten
procedures, but to create empowering new habits for individuals and groups.
Chapter 3—People: The Engine for Creativity at the Heart of
Long-Term Success. The irreplaceable protagonists of any company. Like
Lean Leadership, responsibilization, awareness, sharing, balancing of com-
petences, and learning methods can make the difference between a “leader”
company and a “follower.” The importance of individual growth for achiev-
ing company success.
Chapter 4—Tools for a Lean and Innovative Company. The impor-
tance of adopting the right tools and placing them in the right hands and
at the service of the right processes, without ever taking a bazooka to kill a
fly and without ever putting the tools themselves before the processes and
the people.
xxii ◾ Preface
Chapter 5—Companies That Have Successfully Streamlined and

Innovated Their Product Development. A hundred pages devoted to
seven cases where Lean Innovation and Product Development principles
have been successfully applied in developing new products and processes,
hinging on the energy and abilities of the people who drove the change.
Appendix—Modularity: The Way to Reduce the Total Product Costs
While Drastically Increasing the Industrial Flexibility. A final chapter
that focuses on a vital technique for all the companies aiming to implement
product platform strategies, to reduce their industrial complexity, to increase
the responsiveness to the market, to reduce the full cost of their products,
and to gain flexibility along the entire supply chain.
Furthermore, it is possible to learn more about the topics and carry out
many other resources on the web through the links you will find at the end
of each chapter.
I hope your journey will benefit from this book.
Good Reading.
Luciano Attolico
CEO and Founder, Lenovys
Acknowledgments
I would like to thank all the people who contributed to the birth of this
book, apologizing in advance to all those who I have not mentioned.
A special thanks to Jeffrey Liker, professor of Industrial and Operations
Engineering at the University of Michigan, author of The Toyota Way, and
co-author of The Toyota Product Development System, who deeply inspired
me with his teachings and his works: thanks for his contributions and for
the trust placed in me.
I am grateful to my friend John Drogosz who, with his generous men-
toring, his motivation, and his unreserved support, has guided me and my
team in our professional growth and who has contributed to the drafting of
the Peugeot Citroën business case.
When I think of my friend and sensei Gianluigi Bielli, I am convinced
that, without his constant and tireless support over the last years, I would
not be where I am today; a huge thank you also for having enriched this
volume with the writing of the Appendix on modularity.
Tommaso Massei, with his intuitions, his contributions, and his enthusi-
asm, has been crucial in giving the final inputs to the writing of this book.
The adventure of the last years would not have been the same without my
friend and colleague Leo Tuscano, with whom I shared hundreds of reflec-
tions and discoveries: thank you for your unceasing help on all fronts. A
big thank you to Simone Bielli, Giuseppe Patania, Federico Loffredo, and
Emanuela Frasca for their continuous support and for the precious revisions
of texts.
I thank Pietro Cassani of Sacmi for having believed in Lenovys from the
very beginning and Mauro Ferri, Agnese Peliconi, Emanuele Ceroni, Davide
Baldisserri, and Marco Salieri for their contributions to the cases exposed.
Thanks to Luciano De Oto of Lamborghini for sharing the processes and
tools of a company that makes the whole world dream.
xxiii
xxiv ◾ Acknowledgments
I appreciate the courage and support of Jan De Haas of Laika, whom

I thank very much together with Roberto Viciani, Ennio Frullano, and
Francesco Gabrielli for sharing their Motorhome project. Thanks to the
whole Laika team for the work done together in recent years: Filippo
Masini, Elisa Brettoni, Enrico Ciacci, Paolo Bisanzi, Monica Rigacci, Simone
Mazzuoli, and Giuseppe Lovino, along with the rest of the team.
A sincere thanks to Alberto Marinai, Riccardo Toncelli, Fabio Sarri, and
Marco Fiaschi of Continental for their contributions and for having agreed to
disclose the business case presented.
Special thanks to the PSA Peugeot Citroën team for sharing their experi-
ence on the Set-Based Concurrent Engineering. Thanks also to Olivier Souliè
of the PSA Excellence group for sharing his insights and collaboration in
providing the contents of the case presented in this book.
A big thank you to Pasquale Natuzzi, source of vision, tenacity, and
courage for all of us, Filippo Petrera, Antonio Cavallera, Michele Colucci,
Domenico Ricchiuti, Antonio Paparella, Livio Mottola, Antonio Ventricelli,
and the whole Natuzzi team for their work and contribution to the project.
Without the trust and support of my Italian editor Hoepli, mainly in the
person of Andrea Sparacino, this book probably would not have come to
light as you see it today. And a big thanks to Michael Sinocchi, Productivity
Press, for trusting and supporting me in the completely updated and revised
English edition of this book.
Thanks to all my clients and my collaborators for their mutual trust and
for the journey done together. Thanks to the many hundreds of people
who have attended my Seminars, Executive Masters, and Workshops in
these years.
Thanks to my family and friends who have supported me despite the
long distances and the frequent absences.
Thanks to my wonderful wife Francesca, for her tireless support and for
always being close to me even in difficult moments. A final thought, full
of love, for my child Amedeo, who has been enlightening my life since
his birth.
Author
After a Master’s Degree with honors in Mechanical Engineering, Luciano

started his professional career in Magneti Marelli, which is nowadays part of
the FCA Group. He was responsible for the production launch of an electro-
oleo dynamic system for mechanical gear shift, used by Mercedes, Ferrari,
and Renault vehicles.
He moved to Siemens as Industrial Engineering Director and later as
Advanced Technology Development of the Automotive Powertrain Business
Unit. He was responsible for the development of production technologies
and systems, as well as for the production launch of new production sys-
tems for BMW, Mercedes, Audi, and Porsche, coordinating offices and plants
in the United States, Germany, France, Italy, and China.
In these industrial experiences he led many international Lean proj-
ects with mentors such as Masaaki Yutani, former Toyota sensei, Hiroshi
Moriwaki, Jeffrey Liker, and John Drogosz. While working as manager,
Luciano completed his specialization courses of the University of Michigan
in Lean Manufacturing and Lean Product and Process Development.
Luciano is co-founder and CEO since 2009 of Lenovys, a primary
European research, Lean consultancy, and training firm based in Italy that
focuses on Lean Leadership and Innovation. Lenovys was recognized in 2017
by the Financial Times as one of the Europe’s Fastest Growing Companies,
a special ranking called “FT 1000” that includes the top one-thousand
independent European Companies with the highest rate of innovation and
organic growth. Together with his team, Luciano Attolico has supported
relevant companies in their Lean Transformation and training projects, such
as Lavazza, Sacmi, Continental, Roche, Lamborghini, Heineken, Tetra Pak,
MAHLE, CNH, Frigoglass, Natuzzi, Campari, Streparava, Ideal Standard,
Lucchini RS, DeWalt, Whirlpool, Leroy Merlin, and many others.
xxv
xxvi ◾ Author
Luciano has developed the Lean Lifestyle® approach, a management

framework that aims to achieve the Lean Thinking as a Lifestyle. Its ultimate
goal is to get more value with less stress and waste of people energy, bring-
ing at the same time well-being and high performance in the company.
Presently, Luciano is actively engaged as a keynote speaker in the fields
of Lean Leadership, Innovation, Human Energy, and Change Management,
bringing his long experience, his personal philosophy focused on human
value and on the continuous research to achieve more results with less
efforts and higher well-being.
Luciano is author of the Italian best-selling book on Lean Innovation,
Innovazione Lean (Hoepli, 2012); co-author with Jeffrey Liker of Toyota Way.
I 14 principi per la rinascita del sistema industriale italiano (Hoepli, 2014),
a special Italian edition of the classic Liker’s book; and editor for the Italian
edition of Toyota Way per la Lean Leadership by Jeffrey Liker and Gary
Convis (Hoepli, 2015).
Chapter 1
Lean Product-Process
Innovation and Long-Term
Thinking
We often underestimate the impact that innovation in the products or

services we provide to our customers has on the long-term prosperity
of any business. In fact, no amount of operational excellence will com-
pensate for a poorly designed and thought through value offering to the
customer. We are simply putting a well-made and executed, but unappeal-
ing or unuseful, product or service up for sale. This chapter discusses the
links between innovation, product development, and business strategy.
When companies focus on the beating heart of their business, that is, the
set of products and services they offer, they are better able to devote their
scarce resources to the things that can really make a difference to their
customers. Through the years of the Great Recession and its aftermath, too
many companies saw their only way to survival as cost reduction often
gutting the innovation engine that was the key to their future. What those
that could afford it should have been doing is using the downtime to
apply the principles of Lean thinking to the development and innovation
process to have a true competitive advantage when the dust settled and
the economy began to recover.
1
2 ◾ Lean Development and Innovation
1.1 A Strategic Question: Excellence in the

Long-Term or Mediocrity in the Short-Term?
He that does not foresee things in the distant future, exposes him-
self to unhappiness in the near future.
Confucius
Is it possible to generate profits and prosper over a long time, in today’s
capitalist world, by setting targets that are not exclusively short-term “for
profit” targets?
If we look at what great companies have been able to do, we realize that
not only is it possible, but also that it is the only way to guarantee success in
the long run.
For high-performing companies, the long-term strategies and their com-
petitive advantages acquired over time always seem to take priority over
short-term gains. These companies are inspired by the dreams of their
visionary leaders. Companies that come to mind include Google, Apple,
Microsoft, Walt Disney, and Cirque du Soleil. In Italy, we can point out to
Luxottica, Diesel, Ferrari, and Lamborghini.
In the book The Toyota Way by Jeffrey Liker, we discover that the first
of the fourteen management principles that enabled Toyota to produce the
industrial miracle it is today is precisely this: the actions that lead to greater
long-term benefits should always be placed before those that yield modest
short-term gains.1
The Japanese giant has shown how it is possible to align the goals of
nearly 250,000 people to something greater than simply “making a quick
buck this quarter.” Their strategic mission is to create value for the customer,
society, and the economy through their products and services. Irrespective
of the many fine words, it is amazing to witness the commitment of their
people to this strategic objective, translated into everyday activities aimed at
increasing the value of their products and the relentless effort to eliminate
waste. The deep and tangible conviction is that, without a doubt, by living
this principle it is possible to achieve higher profits over time.
Sometimes we are asked: Why haven’t American companies replicated
Toyota’s successes, in spite of being familiar with their model since the
1980s? General Motors had a chance to experience it firsthand starting in
1984 when they launched a fifty-fifty joint venture with Toyota in California
called NUMMI.
Lean Product-Process Innovation and Long-Term Thinking ◾ 3
In fact, this is a paradox, because it is essentially thanks to American and

British scholars like Jim Womack and Daniel Jones, who were funded by
American companies to study the Toyota model and disseminate knowledge
of it,2 that we came to know the Toyota model.
It was not the Toyota people who were marketing themselves, but in
fact the Americans and the British who gave the best possible visibility and
promotion of the Lean model that, since the fifties, has revolutionized their
way of doing business, teaching the world to achieve more with far fewer
resources. Theoretically, the Americans should have known exactly what
to do to achieve the same benefits, but one of the things that led the major
American automakers to the brink of (or actual) bankruptcy was their inabil-
ity to break away from short-term thinking. For example, it is interesting that
General Motors originally viewed NUMMI as having two purposes: One was
to learn how to make small, fuel-efficient cars profitably (which at the time
they were unable to do) and the other was to learn the Toyota Production
System (TPS). In reality, they simply used NUMMI as a way to get Toyota to
run a plant that could build small cars profitably with GM nameplates on
them. Almost nothing about TPS was learned by GM and they did not learn
much about developing and making profitable small cars by simply let-
ting Toyota do it. The short-term benefit of the profitable, high-quality cars
coming out of the plant seemed enough for GM, while Toyota intensely was
studying and learning how to bring TPS to American culture so they could
spread this know-how as they launched new overseas plants over the com-
ing decades.
In most publicly traded companies, senior positions are typically filled by
people motivated to focus on quarterly financial statements to show “gains,”
often from outside the company or even the industry. Success equates to
satisfying shareholders. The focus on “quick wins” and a high degree of
personnel rotation were clearly some of the contributors that led to a genu-
ine long-term strategic dysfunction for those companies and it shows in the
lengthy development of new products that are of little interest to customers.
Toyota’s rise to prominence clearly shows how the value of a company
can grow significantly over time, with a clear long-term strategic vision
that drives daily activities. But, as we shall see, Toyota is not the only one.
For these long-term thinking companies, when it comes to innovation and
product development, we are referring to business strategies and not just
tactics, as happens in many companies. These organizations prefer to spend
more on product development and design, rather than resorting to having
to spend hundreds of thousands of dollars in post-production fixes and

“enhancements” after the fact.
Deciding to invest in better products and taking preventative measures
from the beginning is a cultural trait of innovative Lean companies. Before
techniques, even before the methods, the culture plays a crucial role in the
way that a company approaches innovation. Focusing solely on short-term
results can literally shift the future destiny of both companies and individu-
als. Lean innovators make a great effort to evaluate the real long-term impact
of what they choose to do: the real risks to be taken, the real costs (short-
and long-term) to bear, and the true benefits that will result for their custom-
ers and ultimately their bottom line.
In a 2006 article in the Harvard Business Review, Edmund Phelps3 argues
that the rate of innovation in Western companies, starting with those in the
U.S., was on a path to dangerously low levels. Among the main causes of
this according to Phelps is the lack of a strategic long-term vision. This lack
of strategic vision from senior management and entrepreneurs is attributed
to the increasing pressure from financial markets (institutional investors and
security analysts) to constantly surpass profit quarterly growth goals. This
is reinforced by “deviant” compensation mechanisms, such as large quanti-
ties of stock options, which tend to reward managers on the basis of the
results obtained in relatively short time spans. The resulting shift toward
the achievement of short-term goals results in important consequences that
seriously affect business management. Companies decide, for example,
on drastic reductions in spending on R & D, and do not invest in train-
ing and people development. The tendency is to overlook a whole series
of key activities that will be fruitful well beyond the short-to-medium term.
According to Phelps, failure to invest in innovation in the long run will
deprive the U.S. economy of one of its key success factors, namely the abil-
ity of entrepreneurs to build new businesses, develop new products, create
new markets, and establish themselves in new market niches. Phelps also
points out that innovation cannot be created artificially, from the top down,
or by central public organizations. Innovation comes from the bottom, stem-
ming necessarily from a passion for the product, from the desire to realize
ideas and the desire to make “real” money.4
It is not all dire news, as there are illuminating examples of companies
doing the exact opposite including Apple, Harley-Davidson with its timeless
motorcycle, and Schlumberger, the largest oil services company in the world.
All these companies in diverse industries have something in common: they
are making some far-sighted choices by maintaining or, in some cases, even
increasing investment in product innovation and in R & D, instead of stop-

ping and slowing everything, frightened by the winds of crisis. Even Boeing
with all of its self-inflicted crises in the development and launch of its
revolutionary Dreamliner has orders into the future far beyond production
capacity that will help set the company up for long-term success.
It is in product development and innovation management where the real
key to the long-term success of a company is hidden. Innovation can be the
result of being truly strong or simply playing hard. Imagine two boxers in
the ring. One boxer lands his blows in a powerful and precise way, while
the other one, flustered, thrashes around, lashing out with frequent, poorly
aimed punches. Who is likely to win the match?
This is exactly what happens every day in business!
1.2 Innovating to Achieve Success

If I’d asked customers what they wanted, they would have said a
faster horse.
Henry Ford
For any business today, it is impossible to survive in the marketplace without
continuously innovating products and services. Everything we produce will
sooner or later be made by someone else at a lower cost and probably of the
same or better quality. This “rule” is now true in virtually every industry. The
meaning of innovation is commonly understood as something extraordinary,
outside the scope of what we encounter daily. Generally, it is something that
has a long gestation period, typically within a few groups of dedicated peo-
ple, before it sees the light of day. This is certainly a type of innovation, but
isn’t the innovation required to create the next-generation iPhone—making it
faster, lighter, with a better camera, and a higher resolution screen? In Toyota,
they say the two products that take the highest level of engineering is the
newest Lexus which always requires some breakthrough technology that has
not been in a vehicle before and the Corolla which requires packaging more
features into a lighter weight vehicle at a low cost.
If we analyze what leads companies to continually bring to market new
products that build market share we find that it is impossible to separate the
innovative process from the people and culture of the company. In fact, the
process is the thinking of people and teamwork to share thoughts and build
on new ideas.
On occasion the lone inventor will have a eureka moment, but companies
that renew themselves continually depend on a certain type of leadership,
an environment that supports teamwork and creativity, and a lot of trial and
error. In other words, innovation is the result of a widespread mentality and
culture of continuous improvement and not just the stroke of genius of one
or a few people.
To better understand this statement, let’s analyze more deeply the vari-
ous types of innovation in a company, taken from our framework “Impact
Innovation”:
1. Product Innovation
This is the most frequently discussed type of innovation which
includes:
a. Incremental improvements of existing products: These are modifica-
tions of older products with some improvements such as improved
performance, updated styling, or added features. This is often used
to help maintain the competitiveness of a product and keep existing
customers.
b. Introduction of new generation products: Replacing or significantly
improving the value proposition of existing products. In this case, it
is a major redesign changing the appearance, function, or cost of the
product. In this case, it is not just about keeping existing customers
but trying to “steal” customers from other product segments or the
competition.
c. Introduction of “out of the box” products that did not exist before:
These products are created to meet unfulfilled customer needs
which can lead to the creation of new markets.
2. Commercial innovation/extension of the perception of value
How products are presented and delivered is another area of
innovation:
a. Marketing, promotion, and communication of products: Using cre-
ative means through this channel increases the perceived value of
the products or makes them stand out in comparison to other simi-
lar products. As an example, think of those advertising campaigns
that leave the jingle stuck in your head for hours after you saw the
advertisement.
b. Extension of the experience of value linked to the product: Pulling
the customer toward the product or service to have them see or feel
the value firsthand. Consider the case of the Apple Store, where the
potential customer becomes a user who can experience products,

service, and culture before actually owning them. Another example
is Toyota’s attempt to attract younger buyers to Lexus by changing
the look of the dealership including adding a café.
3. Innovation of processes/tools for the manufacturing of products
Many of these types of innovation may not be directly seen by the cus-
tomer but nonetheless help drive value behind the scenes.
a. Incremental improvements to existing operational processes:
Reduction of elements that do not add value for the end customer
and increases efficiency in terms of cost and use of resources.
Examples would include the kitting/packing operations at
Amazon.
b. Introduction of new processes or operating methods: These typically
employ radical product innovations from other sectors such as new
machines, new technologies, new measuring devices, etc. An exam-
ple would be Fed Ex’s state-of-the-art sorting system that enables
their overnight delivery service.
4. Innovation in the company to support people
While innovation comes from people, innovations can also come
about in ways to enable creativity. Some forms of people innovation
include:
a. Creation of social and organizational conditions that foster the iden-
tification and adoption of innovation in the company’s product and
process.
b. Leadership and cultural evolution of the individuals: investments in
developing people and culture to enhance internal expertise, motiva-
tion, and spur creativity.
Unfortunately, innovation alone does not guarantee success. Many com-

panies have invested in new products and services and not seen sales
materialize or gain a solid return on their investments. For example, in
2000 Procter & Gamble found that only 15% of its innovation projects met
the turnover and profit target. By reviewing and improving the company’s
entire innovation system, incredible results were achieved. The company
created a structured plan in which the principles of Lean Thinking were
gradually introduced along with a reorganization of the entire Research and
Development group to enable innovation to thrive. In ten years, the success
rate, i.e., innovations that met and exceeded the target profit and turnover,
rose by over 50%.5
1.3 From Lean Management to the Lean Development

and Innovation System
Those who are enamored of practice without science are like the
sailor who gets into a ship without a rudder or compass and who
can never be certain of where he is going. Practice must always be
founded on sound theory.
Leonardo Da Vinci
1.3.1 Lean Thinking

Lean thinking is, first and foremost, a different attitude in the individuals
who work within an organization. It is an attitude that leads straight to the
heart of things, to respond promptly to a clear need: Who is our “real” cus-
tomer and how can we provide them value?
It can be an external or internal customer, our colleague or a boss we
provide with a product or service. With Lean Thinking, we constantly ques-
tion not only what value customers exactly expect from us, our products,
and our services, but how we can continually increase it while at the same
time reducing activities that do not add value. For this reason, applying the
principles of Lean Thinking are vital to any innovation process.
From the Lean Thinking perspective, an activity can fall into one of three
types:
◾ An activity that the customer is willing to pay for and therefore a value-
added activity that is also recognizable by the end user; (Luciano’s
Japanese sensei,6 Masaaky Yutani, added that in his opinion an activity
is value-added when the end user is happy to pay you for it).
◾ Activities that do not add value for the customer, but that are deemed
necessary. For example, an activity that meets legal and regulatory
requirements. Despite being “auxiliary,” they can be crucial to the com-
pany’s ability to function.
◾ A completely non-value activity, i.e. pure waste, that the customer
would never pay for and may even lead them to question their desire to
purchase the product.
The starting point, in the spirit of Lean Thinking, is to see our activi-
ties through the eyes of the customer. Learning to recognize the value in
our processes, and distinguishing them from the possible different forms of
waste is our task.
To start wearing “Lean glasses” means completely changing the point of
view of how things are done, managing to be “honest critics” of everything
we do, beginning a journey that can take us a long way toward freeing up
our time to do more innovative value-added tasks.
1.3.2 Historical Background of Lean Thinking

Lean thinking has its roots in Lean Manufacturing, the production model
now known all over the world that originated with the Toyota Production
System. It actually all started with Henry Ford and his moving assembly
line, which became the model on which Toyota based its production system
in the forties, “a continuously moving line is a continuous flow of mate-
rial,” which is the ideal of the Toyota Production System (TPS). It then fol-
lows that anything that blocks or slows down the flow of material is waste.
Unfortunately, the Ford Motor Company did not continue its commitment
to the original vision of Henry Ford. At its largest factory along the River
Rouge, near Detroit, Michigan, one of the largest complexes of the manufac-
turing era, the focus was shifted from the flow of material to the objective
of making as many parts as possible to keep the machines constantly run-
ning, whether the downstream processes were available or not. Inventory
grew enormously as each machine worked on its own time cycle, regardless
of the demands of the other processes. Ford made the mistake of turning
the Rouge plant into a series of “process villages,” disconnected islands full
of semi-finished products waiting to be assembled into a final product. The
fluctuations of market demand were absorbed by a production that forced
the finished products into the sales network (“push” production). Flow
production (as it was designed by Ford in 1914) was transformed into mass
production.
Meanwhile, Toyota was developing the Lean manufacturing system that
allowed it the flexibility to build to customer demand (the Toyota market
was originally confined to Japan, which required small quantities of highly
varied products) and to continually improve its products and processes.
Taiichi Ohno had the task of closing the huge productivity gap that
divided Toyota from its American competitors—originally Ford was nine
times as productive. He built from many ideas imported from those same
American companies and with a long series of experiments he managed to
develop what is now known as the Toyota Production System (TPS). One
of Sakichi Toyoda’s earliest innovations, when they were still making looms
for weaving was the ability for the machine to detect defects and stop every
time there was a quality problem. This became the basis for one of the
key concepts of the Toyota Production System, Jidoka (stop when there is
a problem in manual or automated processes and fix the problem). Ohno
turned the idea of Kiichiro Toyoda into reality, established the second key
concept of TPS: the manufacturing pull system, or Just In Time, which con-
sists of “pulling” the entire production system according to the demands of
the products as customers request them. Ultimately, this led to organizing
the entire management of the materials, both internally and with the suppli-
ers, on this principle of replenishing in small quantities each item according
to actual consumption.
Toyota also recognized the importance of its people, who were not just
viewed as low skilled workers, but were valued team members expected to
participate in continuously improving processes. Another of Toyoda’s key
innovations (working with Shigeo Shingo) was to make production lines
flexible to make multiple products by minimizing setup times between one
product and another.
While TPS enabled Toyota to grow its sales, it was not until the early
1990s when the book The Machine That Changed the World was published
that the global business community truly saw the power of TPS. It was
from this book that the term Lean Manufacturing, or Lean Production origi-
nated, as Toyota was doing more with less of everything: less space, fewer
people, less capital, and fewer warehouses.7 For many years, Toyota closed
with annual profits consistently higher than those of GM, Chrysler, and Ford
combined. Toyota’s market value in 2005 amounted to 177 billion dollars,
exceeding the sum of the three great American companies (Ford, General
Motors, and Chrysler) put together. The design and development of a new
product requires twelve to eighteen months for Toyota, while the main
American and European competitors take up to two to three years.8 Even
today Toyota, despite the unfortunate recall campaigns of 2010,9 remains
a beacon in the world for its market value, its profits, the very high qual-
ity of its products, its high productivity, its reduced cycle times, and high
flexibility.
1.3.3 What Can We Learn from the Toyota Model?

This historical overview explains why the Toyota model has been so thor-
oughly studied and promoted throughout the world. I have also learned a
great deal from this study, in fact, I have been deeply influenced by it, having
worked under a Toyota sensei. What I tried to do is to understand the simi-
larities between Toyota and other companies that have had similar excellent
growth, even outside of the automotive industry. In my professional career, I
have always tried to figure out how to apply, in different contexts, the models
that are foreign to us in terms of their industrial culture and extraction.
For example, a fundamental concept very dear to Taiichi Ohno is the
famous “circle of Ohno.” It was an actual circle drawn on the floor inside
the factory where he spent hours standing to observe what happened in the
production department. He continued to watch and observe, hunting down
all forms of possible waste. Unnecessary movements, unnecessary transport,
scrap, redundant processes, products not shipped on time, excess inventory,
people waiting for materials, and so on. His goal was to identify the causes
of waste in production in order to reduce the time that elapses between the
moment the order is received and when the product is shipped to the cus-
tomer ultimately leading to payment for the product.
Accordingly, he classified what he saw in production, into seven major
forms of waste (+ one).
1. Overproduction: the worst waste of all, when you produce something

that is not strictly required by any customers.
2. Waiting: for materials, information, orders, or anything else that
impedes flow.
3. Unnecessary processes: redundant tasks, processes that are not strictly
necessary that drain company resources without having a particular
added value for the end customer.
4. Scrap, reprocessing, and poor-quality products: every time we produce
semi-finished or finished products that need additional processing and
resources to eliminate defects.
5. Unnecessary transport: transport from one area to another
6. Inventory: takes up space to store material waiting to be sold or
shipped to the customer.
7. Unnecessary movements: any movement that does not directly transform
material into value for the customer.
8. Not using the full human potential at our disposal: this type of waste
was added by Jeffrey Liker a few years later as part of his early studies.
Ohno’s focus was to break down all the waste to maximize cash flow,
minimizing the time between receiving the order and delivery of the finished
product in order to obtain new cash to be reinvested: this concept is fully

adaptable to this day in all contexts, because in the end, it means asking a
question that prevails over all the others: How can we reduce the time mate-
rials, information, and resources that are present in our company? The less
time a product is in the system, the faster it can get to the customer (and the
cash can be collected).
1.3.4 Wastes in Product and Innovation Processes

What regularly happens with improvement projects that are carried out in
administration and new product development?
In the example in Figure 1.1, we see a typical flow of development activi-
ties of an automotive product, which is very similar to the product develop-
ment flow of other industries. We move from the stage of conceptualizing
the new product, where stages of marketing, modeling, styling, prototyping,
and developing the production processes all come together, arriving at the
tooling phase and the final production launch. The total time of most devel-
opment projects ranges from eight months to two to three years, depending
on the product complexity.
If we divide the typical development activities into activities that are
value-adding for the end customer (dark areas in Figure 1.1) and the others
that are non-value added (light areas in Figure 1.1), on average, less than
Figure 1.1 Example of the product development value map for a car company.
(Source: Morgan J. and Liker J.K., The Toyota Product Development System:
Integrating People, Process, and Technology, New York: Productivity Press, 2006.)
20% of the total time spent in product development in a typical company is

devoted to value-added activities. So, if we look closely at the example, the
reason we take so long on projects is not due to the dark blocks of activity,
but rather the gray ones (i.e. wastes).
I don’t know why, but we tend to focus more on improving activities in
the dark area, value-added, that are generally already the smallest part com-
pared to the whole.
Ironically, traditional improvements in product development in the past
years have been focused on the dark blocks (value added activities). For
example, companies have spent millions of dollars and thousands of hours
have been spent on implementing new information technology (CAD sta-
tions, simulation, engineering change order systems, etc.). While these tools
have clearly helped improve design quality and computational speed, they
have had only a slight impact on the overall product development cycle time
(see Figure 1.2).
However, many have stopped there. Consequently, nothing happens to
reduce the number of days in which data is waiting between areas or the
vast number of drawings that are re-done over and over again. Nothing is
done to avoid wasting weeks churning over designs and validating them. If
the goal is to reduce the total development time of a new product or service,
then it is smarter (and cheaper) to attack 80% of the problem, the light parts,
of waste, rather than the dark parts of Figure 1.1. With Lean product devel-
opment, the focus is on attacking these wastes that are stopping us from get-
ting our product to the market.
Figure 1.2 Example of the difference between the traditional approach and Lean
approach to improving.
That being said, the goal is to improve the speed of the overall prod-
uct development Value Stream and not necessarily the speed of each area.
Sometimes it is possible to make significant improvements to products by
spending only a few minutes more than usual, interacting upfront in the
design phase. For example, during the design of a mechanical component,
taking the time to draw an edge that is a little more rounded in order not to
cause problems for those who handle that piece in the manufacturing facil-
ity or researching for a cheaper but equally functional material in order to
reduce the cost. These examples illustrate how working upstream in design
can eliminate unnecessary waste downstream in production.
Often thinking of attacking these problems is more difficult, more awk-
ward, more complex, because it forces us to create interaction between tech-
nical aspects and social and behavioral aspects; one is forced to go much
deeper to discover the causes of waste and this forces us to do a 360° turn
to see waste within the company. So, learning to recognize waste and focus-
ing on eliminating it is what will contribute the most to a company’s success,
especially when we learn to do it in the early stages of product develop-
ment. In this way, we get the most value with the least overall effort.
When you make an improvement on a value-added activity, you achieve
marginal improvement in the individual activities involved. For example,
look at high-performance computers compared to the past and the use of
email. While it is true that there has been an undeniable improvement in
single activities that involve the use of the computer itself or the use of the
email (fast processing and communication of individual data), we cannot
say that the total flow activity involving PCs and email have seen significant
improvements. In fact, in some cases, real communication between people
within projects have even worsened.
Therefore, when measuring the benefits of an improvement we need to
consider it in the context of the entire Value Stream. If we cannot measure
the effects from the perspective of the Value Stream, the flow of value, from
the idea of a product to when the customer is actually holding the quality
product he expected in his hand, then it will also be more difficult to verify
the successful reduction of waste.
From this point of view, any improvement activities leading to a reduc-
tion in overall product development time, such as reducing the number of
iterations, the reworking of tooling, and the useless waiting, in design and
administrative tasks should be encouraged. Certainly, the elimination of such
waste has a tangible effect on cash flow, even though traditional account-
ing systems are often not designed to give immediate evidence of this; in
the end, it will show up in either reduced development costs and/or product
costs. Perhaps, more importantly, the product or service gets to the market
sooner and hence generates revenue for the company sooner.
Therefore, by reducing the light blocks, the waste, there is a gain for the
company with almost zero investment, except for the cost of the people who
are involved in the critical review of their own processes and their habits.
While it is true that outside help can arrive to more quickly identify waste
and lead the company toward possible solutions, in the form of mentor-
ing and coaching, rather than traditional consultants, it is also true that the
greatest effort is made by the people within the company. In these Lean
projects, the consultant cannot replace the people who do the work every-
day. However, outsiders can provide examples of other companies that
have faced similar experiences and provide guidance and methods to help
quickly bring out waste that is already present in the working group but
not expressed or is buried by deep-seated habits or lack of initiative and
leadership.
In fact, the success of a Lean journey depends, in part, on the choice
of a good sensei—a mentor who is knowledgeable about Lean, has a long
history of implementation, and someone who has the ability to change the
people’s way of thinking. This is the big difference, from the point of view
of the business of traditional management consulting. Empowering custom-
ers by teaching them to be independent is, on the long-term, more impor-
tant than providing the right solutions to the problems.
With a Lean approach, giving the attention to the customer must be the
true focus of all those involved in the Value Stream and cannot simply be
staffed out. Almost always, waste reduction is achieved with very simple
tools and above all with changes in attitudes, ways of thinking, and habits
by those involved in the process everyday.
1.4 Types of Waste in the Innovation Process

A wise man will make more opportunities than he finds.
Francis Bacon
How to recognize waste in the forest of endless meetings, without construc-
tive conclusions, dependency on emails, attitudes of justification rather than
solutions, good ideas that are untapped, knowledge distributed, or main-
tained by word of mouth and not structured?
Figure 1.3 Most of our time is typically spent in wastes according to the Lean
Thinking principles. Our main job should be distinguishing value added from waste.
You can summarize the causes of waste in major categories, just as

Taiichi Ohno did by dividing into seven macro wastes the causes of lost
productivity in a production environment. Over time, different approaches
have expanded on the concept by combining the major categories of waste
to product development and processes (Figure 1.3).
In their research, Morgan and Liker categorized waste into twelve
items that are specific to the design and development environment. These
include:
1. Handoffs
Handling occurs when activities and responsibilities are transferred
from one part to another, when we pass a “semi-intellectual” job from
one person to another. This actually occurs many times and often
without realizing it, when we pass the ball of responsibility from
one person to another, when one person begins a job and another
finishes it, when the right hand doesn’t know what the left hand is
doing, when a group task is confused with a lower level of respon-
sibility and individual ownership, when a task is fragmented into too
many subtasks, and loses the thread. Some of the causes of this type
of waste are identified in poor communication, in poor interpreta-
tion of those giving and receiving information, in poor assessment of
the full individual potential for overseeing the entire flow of a series
of interconnected activities. This category of waste is comparable to
unnecessary transport and unnecessary movements that occur during
production.
2. “External” Excess
Falling into this macro-category are all the effort and time spent collect-
ing data that no one will use, data that no one reads, and reports used
to 10-20%. The paradoxical thing is that this waste is often linked to its
opposite: the data required is not available when it is needed, or it takes
three times as long to find it amongst all the other unnecessary data.
3. Waiting Times
Waiting for data, answers, decisions, and revisions, due to lack of capac-
ity and resources (human and machine). We often confuse various
kinds of waiting with the value-added process, such as every time we
stop or slow down because of lack of control, too much information,
complicated research, outdated information, incompatibility of infor-
mation, or software incompatibilities. And also: communication errors,
security issues, lack of direct access, reformatting, and the need for
further information or knowledge.
4. Redundant Tasks
For example, multiple inspections and checks, rushing, creation of
unnecessary data and information, dissemination of information, too
much customization, and too many iterations.
5. Stop and Go
This occurs whenever an engineer, technician, or employee must reori-
ent to a task. When you recommence a project several times it is like
having multiple set-ups. This waste is what causes the greatest inure-
ment and goes hand in hand with interruptions. It is often mistaken for
a virtue, indeed there are those who boast of being capable of having
dozens of projects going on at the same time. Whenever someone is
forced to stop and restart, on average it takes about fifteen to twenty
minutes to return to the level of intellectual energy and concentration
that they had when they were interrupted.
6. Transactions
This is time wasted in ancillary but necessary activities. For example,
contracts, negotiations, meetings to work on various offers, complex
contracts, supplier selection, scheduling resources, trade union activities,
etc. These are all activities that force us to waste too much time when
there is a lack of clear processes, clearly defined responsibilities, or
mechanisms that do not delegate enough.
7. Reinvention
Recreation or rediscovery of things that are already known. How often
do we reinvent things invented by others? How often do we confuse
creativity with reinventing something? Instead of worrying about invent-

ing something that has not yet been invented we are content to reinvent
something that has already been invented. Instead of starting from a
higher level to create something of greater value, often we are witness-
ing reinvention.
8. Lack of Discipline
Being certified and using a wealth of procedures written on paper does
not provide real discipline in operational processes. Can you imagine
any sport, individual or team sports, without rules and particularly with-
out the discipline to follow those same rules? What would happen to
that athlete or that team? Beyond the legal aspect of the issue and then
the penalty that might be applied, what would happen would certainly
not help in terms of sports performance, as much as all the schemes
are actually designed to maximize performance in the ongoing compe-
tition. Moving on to company dynamics, the lack of discipline causes
variability in the output of a process to change the time and the people
involved, as well as unpredictability of the length of the line-ups wait-
ing at each center of intellectual work.
It is often assumed that the presence of procedures, or practices due
to years of repetitions of the same behaviors, automatically mean real
optimized processes and relative discipline in following them. So we
are not talking about the external rules imposed, but the rules and
regulations that arise from the inside with the purpose of increasing
the performance of the individual and the group. It is well known that
discipline and creativity are two sides of the same coin: the more teams
and people learn to be disciplined and follow the rules of the game,
the more natural space is found for creativity that adds value. Putting
together discipline and creativity liberates vital energies because with
the rules of the game you learn how to do certain things almost auto-
matically and “routinely,” and at the same time it frees up energies for
those activities with high added value in the spaces appropriately des-
tined for this purpose.
9. Variability of Processes and Inputs
Late delivery of information. Delivery that is too early. The variability
of processes, activities, and the arrival of input are some of the main
causes for long lines and long crossing times. This happens, for exam-
ple, whenever there are changes of direction, changes in objectives, or
disruptions to an ongoing project. This category of waste is the same
that causes inter-operational stockpiling in production.
10. Overuse of the System

Once you reach 80% use of a system, every little change has dramatic
effects on crossing times and then the performance of that system.
Imagine that you always have an agenda full of commitments with no
gap between one commitment and the other. How likely is it that you
can fulfill all the commitments on time, rather than in the case where
you have an agenda with scheduled commitments and gaps between
one commitment and another? Nobody pays attention to the fact that
a system of human beings has a productivity rate that depends on the
load it is bearing. Having a team employed at 60% or 90% of their satu-
ration rate makes a vast difference in that same team’s yield. It is essen-
tial to take this into account when managing projects. The calculation
of the saturation capacity of the teams is extremely important when
developing new products.
11. Large Batches
Data “pushed” forward and not “pulled” by those who need it. The
cycle time increases with the size of what we do, or the lot or batch,
and the same is true of intellectual production. The waiting times
become longer for the delivery of large quantities of data. We have a
real surplus when we work “in large batches.”
For the designer, it means having the parcel of one hundred
drawings to be processed before passing it to the next department,
instead of doing one thing at a time. How many times do you have
the feeling of going faster by doing several things at once? In fact,
the fewer things one does in the fraction of time, the faster you
go in the long run. The concept of the large batch is the same for
humans as it is in the production system: the more things you put
into the “processing tube,” the slower you go, even if you have the
illusion of going faster.
12. Simultaneous or Concurrent Unsynchronized Activities
This is one of the most insidious forms of waste and often seems the
right thing to do even if it is often the basis of a whole series of other
forms of waste. Has it ever happened to you to not be called upon to
make your contribution in a certain phase of the project, only to real-
ize that when you are called on to make your contribution, either it is
given no space or it leads to changes and reworking?
Contemporary unsynchronized activities and discipline are comparable
to the waiting periods and therefore every time we move in the office,
whether in accordance with the production or not, we are faced with
Figure 1.4 Similarity between the seven capital wastes of Taiichi Ohno and the
wastes found in the offices.
a waiting problem that a person or a department is forced to endure,

because there is no synchronization between different parts of the sys-
tem (Figure 1.4).
1.5 Process Kaizen in Non-Manufacturing Processes

If our only tool is a hammer, every problem looks like a nail.
Bill Gates
The Lean approach, although developed in Japan over fifty years ago, has
been consolidated by the experience of thousands of companies and today
continues to offer a valid structured improvement methodology. In reality,
the overall process improvement approach is no different whether we are
considering a repetitive manufacturing process with short cycle times or a
non-routine, long cycle process like product development. A good starting
point is to get a big picture view of the process to identify the big wastes
and then systematically work toward solving the problems that prevent us
from working more efficiently with shorter lead times. One tool that helps in
Figure 1.5 Typical flow of process kaizen.
viewing this big picture state, useful for manufacturing and product develop-
ment, is Value Stream Mapping.
The Value Stream Map (VSM), also known as the “material and informa-
tion flow map,” makes it possible to somewhat crudely, but effectively, ana-
lyze the physical and information flows within any process. Figure 1.5 shows
the major steps of the process. The departure point is always the customer
after which we analyze what is happening today (current state) to identify
the wastes. We then set aside the current state and all its constraints and
think in an innovative way to define a new process without wastes referred
to as the future state. The future state is then broken down to manageable
pieces, or gaps between the current and future state, so that we can identify
the root causes of these gaps, develop countermeasures, and action plans
with accountability for improvement.10
While Value Stream Mapping and the subsequent process improve-
ments are powerful, this in reality is the “easiest” part of the problem, the
tip of the iceberg. Traveling all around the world, the finest consultants and
managers may be able to provide the illusion of improvement and waste
reduction, almost feeling themselves to be following the distant footsteps of
Taiichi Ohno. But too many companies have more or less activated tactical
improvements and “local” optimizations inspired by the good principles of

Lean Manufacturing.
In the field of production, waste can be more easy to deal with because it
is visible. In our offices, where often is spent the time of developers, manag-
ers and designers, on the contrary, it becomes more difficult because daily
habit inures us to a huge range of large and small-scale waste.
Many times, the biggest part of the company iceberg, however, remains
hidden below the surface. Just think of all the times we repeat a task, in
which we repeat redundant gestures. Perhaps they are controls already
performed by others, or when waiting for information that prevents us from
fully carrying out our work or when we are interrupted in a task.
Interruptions are one of the biggest issues of the intellectual work:
humans, like machines, are subject to the problem of set-up when they have
to switch from one intellectual activity to another. It has been shown that, in
office activity, the human being loses 40% to 60% of his/her efficiency due
to the power of interruption and the devastating effect of multitasking. Now
in our working days, it is increasingly easier to go from one interruption to
another rather than from one task to another. The continuous interruptions
are only one of the forms of waste that we try to eliminate in product devel-
opment activity. Being aware of the motivations related to interruptions, or
the other types of waste typical of intellectual activity means investing in
“awareness of people” before technology and other substantial expenses. If,
therefore, recognizing waste in production means careful observation of the
physical world around us, learning to recognize waste in the office means
learning to look at ourselves differently and learning to recognize waste that
we become accustomed to every day, to then understand how such individ-
ual forms of waste concatenate with the waste of others.
1.5.1 Waste “Suffered” and Waste “Generated”

Sometimes inefficiency occurs due to the habits of working groups with
whom we interact, but often we play a vital role in creating some of that
waste.
Think of the above-mentioned interruptions. Think of when we superfi-
cially copy knowledge to people who are not essential, creating truly useless
activities. Not worrying too much about other people’s time reflects on how
much we value our own personal time. Unfortunately, we are so inured to
the waste that we no longer notice it and therefore, not only do we bear it,
but we have also learned how to create it silently.
Sending on a “miscommunication,” for example, is another fact that should

make us think, as it will most likely be the trigger for a further waste of
time related to the ease with which we initially created the ineffective com-
munication. Having discipline and seeking forms of standardization in cer-
tain areas of our business does not mean losing creativity; instead, it means
more space for creativity. And every time we touch upon all this waste, like
reducing interruptions and reducing redundant things, we do just that, we
remove some of the wastes in our individual and organizational processes. If
this becomes common practice, then we will begin to notice that our project
times will shorten inexorably. I think we are all obliged to try to figure out
how to free up more space for our creative staff to give more value to our-
selves and to our customers, both inside and outside the company.
1.6 Why Invest in a Lean Development

and Innovation System?
It is not the strongest of the species that survives, nor the most
intelligent, but the one that is most responsive to change.
Charles Darwin
The key word here is “system.” Often, we witness excessive “personaliza-
tion” of groups or departments, entrusting the burden (or the honor) to the
resolution of some problems to a specific person working that shift. This
often leads to finding ourselves repeatedly facing the same errors over and
over again and feeling the same frustration time and time again. We are then
forced to take on extra tasks ourselves to perpetually “fix” the problem or we
need to rely on that one particular person who knows how to fix it. If we
see this happening, clearly something is wrong with our product develop-
ment system. In fact, there are two systems that interact in every company in
this world: the individual and the company. One is made up of internal rules,
habits, beliefs, and emotions. The other is made up of more or less written
rules, policies, procedures, organization, processes, and tools (Figure 1.6).
The two systems have a strong impact on each other, creating a mutual
interdependence. When you work on both systems to make them grow and to
make them interact better with each other, you create the conditions in which
solutions are found, ideas are put into practice, rather than just doing tasks
that are transitional and impromptu, but are a solid ground in which to sow
new ideas, new solutions to new problems, without retracing your own steps.11
Figure 1.6 The difference between Individual and Company Systems. (Source:
Andersen Consulting.)
Figure 1.7 Influence on the costs of the product life cycle: about 70% of the total
cost of a product is influenced by the phases of R & D and industrialization, although
their incidence is approximately 10% of the total. (Source: Lean Product Development
Benchmark Report, Boston, MA: Aberdeen Group, 2007.)
The opportunities for improvements in product and process innovation

are well documented. If we consider the entire life cycle of a product or a
service, the average costs that the company will sustain will be allocated
as in the bottom row of Figure 1.7: about 5% will be costs of research and
development of the product, 5% the cost of industrialization, 50% materials
purchased, 15% labor costs, and finally about 25% indirect costs related to
the product concerned.
This subdivision of budgets explains why most activities, to reduce costs
and improve business, are typically focused on the areas of production,
purchasing, and administration, rather than product development. In Lean
Transformation programs too, the attention is often given to the areas with
the greatest cost reduction opportunities. While clearly there is waste in
those processes, some of it is actually generated further upstream in the
product development processes.
What is puzzling is the almost complete indifference to a huge oppor-
tunity hidden in the heart of the product development of any company. In
fact, approximately 70% of the total cost of most products (Figure 1.7) is pre-
determined in the development phase. So, while the cost of development of
a product represents a very small amount when relative to the entire life of
the product, most of the downstream costs are determined precisely at the
stage of creating the design.
This evidence would logically lead us then to focus on the effective-
ness of R & D, even if the ultimate goal is to reduce the cost of pro-
duction, logistics, maintenance, etc. In other words, focusing on simply
cutting the cost of design for efficiency, is risky and short-sighted because
it is likely to increase our costs and reduce our viability as a company in
the long term. Yet, focusing on the short-term is precisely what most orga-
nizations do.
This problem stems in part from the financial allocations of cost that
sometimes inhibit us from being able to see the true total cost of a product
throughout its life cycle. The principles of Lean Accounting can help us to
reduce this risk. The traditional accounting systems are developed to support
traditional production systems, and therefore poorly suited to a system that
works on Lean principles. They provide reports and performance measures
that are sometimes “distorted,” in fact they force people to behave contrary
to the Lean logic. A Lean Accounting system, however, is a set of principles
and tools that allows you to align the language and have a consistent vision
of the performance in a business managed by Lean logic, trying to reduce
the transactions to the minimum necessary and properly supporting Value
Stream accounting to eliminate waste throughout the course of the value
chain.
In 2007, research conducted by the world-renowned Aberdeen Group
on the product development methodologies quantified some the benefits
experienced by companies applying Lean product development techniques,
Figure 1.8 Reduction of the development time of new products adopting the Lean
principles. (Source: Lean Product Development Benchmark Report, Boston, MA:
Aberdeen Group, 2007.)
demonstrating that, even outside the Toyota world, there are success stories
of Lean product development methods that are changing company innova-
tion methods.
As can be seen in Figure 1.8, the amount of reduction in total time of
product development, where Lean Product Development methods have
been adopted for a new product, stands at 31% less time. When, instead, an
existing product is revisited, the advantages demonstrated are on the order
of 14% less, leading on average to a 25% reduction measured and quanti-
fied through the sample of these four hundred companies. To this lead time
advantage we must also add the product and financial ones: in fact, we
can see the degree of achievement of the targets of the project shown in
Figure 1.9.
Paradoxically, we find more advantages in developing a completely new
product than remodeling an existing product because, with a remodeled
product, we are more accustomed to waste, both technical and manage-
rial, whereas when we challenge ourselves with a new product, we start
from scratch and have more opportunities for real product and process
innovation.
In conclusion: not only on-time launches, not only lower development
and product costs, but also improved quality and a faster time to market.
What may have sometimes sounded like a fairy tale from Toyota, has been
Figure 1.9 Level of achievement of project objectives for different companies.
shown to be valid for a statistically representative sample of other compa-

nies in a variety of industries. The world is changing and those who have
success learn to innovate their products along with their processes and
people. Lean Development is finally becoming a major focus of leading
companies.
1.6.1 Integrating People, Processes, and Tools

Many companies have emulated the Lean transformations of Japanese com-
panies, sometimes reaching and exceeding their performance in specific
areas of production: spectacular examples of Kanban, beautiful “u”-shaped
cells and 5S. All this, however, is often not enough to give companies
prosperity and long-term success. There have been cases of companies
that have become Lean Manufacturing models, but have found themselves
on the brink of bankruptcy due to new product development programs
always being late, projects over budget, and dissatisfied customers due to
product problems. A business system based on Lean principles is some-
thing more complex than just production; it is a company that keeps its
focus on the of highest quality for the end customers in the shortest time
and with the minimum cost. Key to this vision are robust products and
processes. The real breakthrough, the real quality leap, takes place when
we care about:
◾ acquiring the stability that comes from robust products and processes;
◾ preparing the entire Value Stream tied to the product so that it can
be manufactured and delivered at the highest quality and lowest
total cost;
◾ committing to creating the culture to avoid further errors and continu-
ously improve, whether we are talking about a physical product or
whether we are talking about a service.
To make this leap it is key to make a change in the culture that devel-
ops people who are highly motivated and flexible to adapt to the continual
change.
When you eliminate the marked division between the world of produc-
tion and the world of the product, you begin to deal with the business
as a system of joint development of products and processes that Morgan
and Liker represent with a rather simple three-legged model, shown in
Figure 1.10. If we want to have very high performance in a product oriented
company, we must take the steps described below.
1. Customer Value: Define what you want to offer, distinguish yourself,

and make yourself unique.
2. Processes: identify the standard, i.e. “rules of the game,” determine
where to add value and where to eliminate waste, to make the value
flow according to standard and shared processes, thus ensuring flexibil-
ity and punctuality.
3. People: Make sure that the people involved in the development process
are developed effectively. Identify gaps in skills and abilities, according
to the defined processes. Organize a system that balances the spe-
cialized knowledge with the management side. Make the knowledge
gained available to all.
4. Tools: After having taken the first three steps, verify that the tools and
technologies are the right fit with the processes and people involved.
That is, adapt the technology to the people, align the organization with
simple visual systems, use robust systems to promote standardization
and organization of knowledge. So, technology and tools, yes, but in a
way that helps people. Not vice versa.
Figure 1.10 Scheme of the Lean system in the product development.
1.7 Each Situation Has Its Own Peculiarities

Maybe you are not responsible for the situation you are in, but you
will be if you do nothing to change it.
Martin Luther King
Many times we have heard these phrases repeated:
“Japan is too different from us,” “Culture, yes, the culture is not comparable,”
“The Americans are different too,” “The Germans, yes, they were born with
organization in their souls,” “The company nearby, other leaders, those are real
leaders, ours, no, I’m not a leader,” “Here in our company, these concepts are
not applicable, at least not for now...” and so on with the same content.
The culture of excuses becomes established in the language in many
offices and in many departments of many companies. Each time, we begin
by discussing this bad habit. We create a small working group, in a small
pilot area and we give space to discovering the healthy desire, often dor-
mant, to try to change a situation for the better using Lean techniques. This
exercise offers unexpected stimuli for innovation.
This unconventional space helps get rid of ineffective habits repeated
over the years of work, it provides an area that encourages people to apply
new Lean methods, exhibit sounder problem-solving, and create enthusiasm
for change. This is the first step toward typical experimentation and continu-
ous improvement found in a Lean culture.
Once this pilot phase is underway, the tension is usually reduced
because there is an awareness of being part of an “experiment,” feeling
oneself to be in a “neutral” zone in the company, where judgments and
expectations have been temporarily suspended. It is similar to the practical
simulations we do in all our Lean training sessions outside the company

where participants concentrate with an unusual level of energy, combined
with a healthy competitive spirit, that leads them to learn and demonstrate
the effectiveness of methods that would otherwise perhaps take weeks or
months to understand.
After the pilot phase, the results are evaluated, and then we try to fig-
ure out how to extend the benefits into other areas, by consolidating what
we have just learned (techniques and habits). At the same time, we try to
understand what did not work well in the first phase of experimentation
and why, attempting to immediately implement the appropriate counter-
measures. I am used to leading work sessions with my team, called hansei
( Japanese), or reflection (English), to bring out both the positive and the
negative aspects of the recent experience, to become aware of the causes,
and to translate them into new operational steps that reinforce the strengths
and reduce the effects of the weaknesses discovered. In Chapter 4, we will
see the details of this technique.
The expansion phase is structured with the aim of aligning organiza-
tional, technical, and educational aspects, and above all redirecting the
leadership so it can help grow the Lean culture throughout the company. At
this point in the journey, coaching in Lean Leadership by the sensei aims to
influence the mental attitude of management to help them drive the Lean
Transformation into their groups.
Often at during the expansion phase, we happen to look back and laugh
out loud thinking about when, at the beginning of the journey, someone
said “yes, but here in our company it’s different...,” paradoxically revealing
that indeed it was true. In every place, in every group, what happens is
going to always be different. You learn that you cannot copy and paste other
people’s models, but rather you need to chart your own journey to challenge
yourself to experiment with new ways to apply Lean thinking and to con-
tinuously learn and improve. This is how Lean Innovation will grow within
an organization.
1.8 Summary of Key Points in Chapter 1

1. Importance of long-term strategic vision to pull daily activities. This
is the antidote against short-term mechanisms that may in time
cause the decline of an entire company and hinder risk-taking and
innovation.
2. Structured innovation to drive perpetual growth. Looking at innovation

from the point of view of products, services, processes, people, with a
focus on customer value. When it becomes a widespread mentality in
the company, opportunities at all levels are amplified.
3. Lean thinking to reduce waste across the entire value stream. From the
teachings of Toyota to the adaptations to our situation, especially in
intellectual activities, eliminating waste always leads to a reduction in
costs. Vice versa, is not always the case. In particular, the focus on the
reduction of the twelve wastes of intellectual activity brings benefits to
both the company, in terms of productivity, and to people in terms of
well-being and quality of life in the office.
4. Systems approach to ensure processes, people, and tools are mutually
aligned to consistently deliver value rather than implementing indi-
vidual techniques. So that neither innovation nor the waste reduction
actions remain isolated wins, but rather become part of effective enter-
prise value stream.
5. The real streamlining of the company. Applying Lean Thinking to
stimulate innovation in the development of new products and services
can be a strategic weapon in the 21st century. The design stage influ-
ences about 70% of the total costs of a product and is the key driver of
time to market. When you work in this area, the opportunities arising
from it are far more fruitful and effective for the company than those in
another area of a company.
Resources
https://www.lenovys.com/en/blog/airbnb
https://www.lenovys.com/en/blog/barilla/
https://www.lenovys.com/en/blog/5opportunities/
https://www.lenovys.com/en/blog/innovate-successfully/
Notes
1. Liker J.K., The Toyota Way, New York: McGraw Hill, 2004.
2. Womack J.P., Jones D.T., Roos, D., 1990.
3. Edmund S. Phelps won the Nobel Prize for Economics in 2006. He is currently
the director of the Center on Capitalism and Society at Columbia University in
New York.
4. Phelps E.S., Tilman L.M., 2010.
5. Brown B.B., Anthony S., 2011.
6. The sensei is a person of great experience who transmits knowledge within

the company. In a Lean company, the figure of the sensei is a very important
as part of the basic philosophy and culture. The sensei is similar to a coach or
a mentor, external or internal, who teaches by example and through coaching.
7. Womack J.P., Jones D.T., Roos, D., 1990.
8. Morgan J., Liker J.K., 2006.
9. In this regard, see the official report at the NASA site (www. nasa. gov/topics/
nasalife/features/NESC-toyota-study.html) and refer to JK Liker’s book, Toyota
Under Fire: Lessons for Turning Crisis into Opportunity, New York: McGraw
Hill, 2001.
10. The framework for this way of thinking about improvement is well defined in
Mike Rother and John Shook, Learning to See, Cambridge, MA: Lean Enterprise
Institute, 1999. This book uses a manufacturing case, but the principles apply
equally well to an innovative engineering process.
11. Lenovys, the name of the company founded by Luciano, is an invented name,
but terminologically, it is a portmanteau derived from the three key words
mentioned: (Le) an In (Nov)ation S(ys)tem.
Chapter 2
Processes: The Way We

Work to Add Value
Sometimes we lose time doing the same things over and over again. Often
we see the recurrence of the same kinds of errors. The results of similar activ-
ities done by different people differ much more than we might expect. These
are all signs of a lack of standardized processes. If we want to sustain and
improve performance levels in a company, we must “design” and improve the
way people conduct their work—from product development processes to the
rules with which we organize knowledge in a company and keep it alive and
easy to use. This part of the book looks at the key strategies for planning and
managing a project from start to finish, drawing inspiration from the compa-
nies that have implemented the principles of Lean Thinking at the very heart
of their business activity: the development of new products.
2.1 When Processes Are Real Solutions to Problems

Failures are divided into two classes—those who thought and
never did, and those who did and never thought.
John Charles Salak
Before deciding which processes to adopt we need to think about what
recurrent problems we want to solve.
Have you ever had to reconsider decisions that have already been made,
or in a crisis make a quick decision because there is no time to put things
off any further? Why does this happen?
33
A common cause of this is the lack of clearly defined processes, both

global and individual processes. People are busy, maybe frantically busy,
but they may be working on the wrong things at the wrong time and are
not properly coordinated with others whose work is interdependent. Often
when we lack a clear process we simply start to work on everything we can
in parallel—a critical process error.
2.1.1 Do Many Things at the Same Time or Arrange

Project Activities into a Sequenced Flow?
Should we start lots of things or a do things one at a time? How many times
have you experienced such a dilemma? Perhaps you have experienced the
stresses created by managers convinced that the best way to win time and
earn money is to launch a disturbingly large number of projects and activi-
ties at the same time, all with maximum priority, and all with virtually the
same deadline. And, a very tight deadline, of course. This wishful thinking
is one of the main reasons for waste and inefficiency in office work. One
thing is certain: the vast majority of projects that are launched inevitably end
up being late or take much more effort than originally planned to get them
done. And others will be, or should be, dropped. We know of a vehicle
parts company that on investigation had over 160 R & D projects going on
simultaneously without a strong rationale for any of them. In fact, their main
customer for their core product was fed up with the outdated design and on
the verge of dropping the supplier and there was no project to redesign that
product.
Tasks that have been started and not finished, designs that are under-
way, and changes that come up create an enormous quantity of in-process
work—in some ways not unlike building large quantities of inventory of
parts that are not needed now and may never be needed.
When a new product is developed, the greater the number of in-process
activities and the more the final output will be slowed down.
In the following pages, we will see what steps can be taken to counter
this.
Another common issue is to see people literally throwing themselves
into their development activities, in their own particular area of work, with-
out having a clear overall vision of the final product, i.e. how it is going to
be used by the customer, how the client will perceive it, where it will be
used and why should the customer buy it versus our competitors’ products.
People run around trying to complete an assigned task or design or problem
Processes ◾ 35
solve perceived issues, but often with little or no consideration about it will
(or won’t) add value to the customer.
How can we resolve these problems?
2.1.2 Pay Attention to Small Signals and

Accumulate the Knowledge
Often we repeat the same errors time and time again without even realizing
it. Solutions already found for past problems are forgotten, or the solutions
already found by colleagues to problems sometimes are not even consid-
ered as a possible alternative due to a lack of understanding or trust. We
do not give sufficient consideration to the value that can be generated by
the exchange of experiences and viewpoints between people from different
sites or departments. Instead, more frequently than not, people just happen
to talk at lunch or by the coffee machine, and then only to complain about
problems versus sharing solutions.
Frequently, no care is taken to make available, in a structured fashion,
what has been learned along the way, so as to prevent the same problem
happening again. Everyone holds on to their own “secrets,” and often
this tacit knowledge is so well guarded that we forget them ourselves,
only then to find ourselves suddenly in the midst of a problem or conflict
that makes us think “But I knew that,” or sometimes exclaiming: “I told
you so…”
Project teams from the same company who learn things that they
don’t then pass on, such as technical or project management errors, do
not just highlight an inadequate exchange of knowledge within the com-
pany. They also reveal another cultural characteristic typical of Western
companies, reflecting a psychosocial tendency of developed countries:
the lack of attention given to capturing what is learned and incorporat-
ing it into a shared body of knowledge at the group and company level.
Rather, we value the firefighters who swoop in to save the day with their
“expertise.”
In the Lean world, we are hungry for all the “small signals” of learnings,
including the “oopses,” “it’s only a small thing,” and “how did they do that
so well” that are learned along the way of each project. If we are seriously
concerned with making available to others everything that is learned, it
clearly takes a conscious effort by everyone on the project team. Since inno-
vation is the key to future success, then the real competitive edge of a com-
pany is the capacity to learn faster than others.
2.1.3 Balancing and Synchronizing Work Loads

from a Value Stream Perspective
Another problem we see regularly is an imbalance in workloads between
people and departments and over time. Generally, the majority of people we
interact with are drowning in a pattern of “I don’t even have time to look up
to breathe and see where I’m going.” Their workloads are 100%, and some-
times even more. In the same project, in some other office, someone else is
waiting for the fruits of their labor to complete the next part of the job and
typically ends up rushing to do it as they get the information late. Can you
see any signs of waste in this scenario?
When we are working on a project that involves many people or work
groups, the above scenario plays out on a daily basis. Every person or depart-
ment is trying to optimize (or juggle) their work to get through the day.
Unfortunately, often this does not provide the best flow for the Value Stream,
and therefore causes the project to take more time and/or effort than is needed.
We will look in Section 2.5 at some methods for achieving a better flow
of activities in projects. This is a delicate issue, and is often obstructed by
managers obsessed by the saturation of resources of their department, or by
individuals who concentrate on their own workload without paying attention
to the overall result. Imagine, for example, what a designer does when faced
with the task of producing some designs. If four drawings are required, the
first thing that will be done, if he or she is parsimonious and attentive to the
results, will be to level them according to the amount of time available. So, if
it takes two hours to produce each one, the eight-hour working day will be
divided into two-hour slots, one for each drawing. This, on a small scale, is
an operation of leveling, but done only with a view to that individual per-
son’s workload and department. What is missing is consideration of who will
receive those drawings, and which of the four is clearly identified as being
needed before the others. In companies, this type of phenomenon occurs
frequently: everyone saturates their people and then everyone tries to level
their activities. Does this approach really level the flow of the product devel-
opment Value Stream? Hardly!
Especially in innovation projects and in the development of new prod-
ucts and services, questions of this type are never sufficiently analyzed or
discussed, in order to ensure the job is done in the least possible amount
of time. If we spend more time managing the workload and flow, we can
avoid several wastes such as waiting for work or generating more unplanned
work caused by rework, modifications, or additions. Applying the concept
Processes ◾ 37
of leveling correctly in product development starts by understanding who is

pulling things forward and then aligning the whole cross-functional orga-
nization in order to optimize the schedule and costs of the entire project.
Doing this will open up a world of opportunities that gives us an overall
view of the entire Value Stream, which runs from beginning to end via the
different participants in the project. For example, the design, checking, and
validation areas are no longer isolated and are now balanced in a way that
meets their downstream customers’ needs.
When you see big jobs stacked up, your own or others, before assum-
ing the problem is the scarcity of available resources, before thinking about
adding resources, or, simply, resigning yourself to inevitable delay, try to
observe the flow in its entirety—who is part of the internal client-supplier
chain, where is the bottleneck, and what is the right sequence for ensuring
that the final point of the chain can start moving and pull all the other links
in the chain.
Only very rarely are you an independent single chain in a Value Stream
for the products and processes you are creating together with your col-
leagues, suppliers, and clients. A change in point of view, from that of the
single chain to that of the Value Stream, will quickly lead you to see the
value of putting into practice, in a regular and standard way, the flow of jobs
through the various links in the chain.
2.1.4 How Can We Ask for the Materials and Information

That Are Needed When They Are Needed?
Another problem that can crop up in innovation projects relates to the sup-
ply of materials and information required during the project itself. Instead of
having an organized plan for what is needed and when and triggering the
order at the point it is needed, often a haphazard Stop and Go process occurs,
with useless actions, wasted time for ourselves and others, lots of waiting for
clarifications, and slow-downs, all with the conviction that the time saved at
the beginning using a “head down, full steam ahead” approach always brings
rewards. But this, unfortunately, only rarely happens.
2.1.5 Cause and Effect

Often it is not possible to see the effects of what we do, indeed at times,
whole months can go by before we manage to see the effects of what we
do (or do not do). This is true both in our private lives and in our working
lives. So, when we do not cultivate the habit of associating waste with the
effect it will have after two, four, or eight months, inevitably we lose sight of
the damage associated with it. There is a full-fledged “oriental karma” effect.
There will be short-term karmas, which produce an immediate effect, for
example, a slap that hurts immediately, and long-term karmas, actions that
have an effect on us, but which we do not see immediately. We do a series
of things that will have an effect several months on, and in organizing our
processes we need to take account of both short- and long-term effects of
our actions on a project.
2.2 Make the Customer the Center of Attention:

Concept Paper
Don’t take your eyes off the end.
Alessandro Manzoni
Defining customer value is the first step to take before innovating to create
and develop a new product or service. What exactly does the customer need
and value? What do we want to present to the customer? Why are we doing
the project?
Before anything else, it is worth visualizing exactly what is expected from
the final product or service. Too frequently, superficial descriptions of value
in the initial phases of a project are paid for dearly in the intermediate and
final stages.
The less we know beforehand about the value that the product will have
for the customer, the less easy it will be to distinguish waste from activities
that add value. At the beginning of any project, then, it is fundamental to
ask who the customer is and how we can solve important customer prob-
lems and please them. Note that the customer does not always know what
they want. Henry Ford once quipped: “If I’d asked customers what they
wanted, they would have said ‘a faster horse’.” Thinking creatively about
what is possible, and really understanding how customers live their lives
and what would help them and appeal to them requires going to the gemba.
In this case, the gemba is where and under what conditions the product or
service will be used.
Once the market, customers, and conditions of use are deeply understood
they become requirements to be translated into concrete actions in order to
obtain a product or service that is saleable to the customer. This process,
Processes ◾ 39
illustrated in Figure 2.1, needs to be continually renewed during the early

phases of the project to gradually bring into focus the true needs and to
figure out how the project will deal with the trade-offs that will inevitably
come up.
In other words, in development phases there is always a need to revisit
the purpose and customer requirements cycling through implementation,
control, and corrective action, following the Deming cycle:
Plan—Do—Check—Act1
This concept applies for all kinds of projects (Figure 2.2), ranging from
those involving the customization of a product to ones involving strategic
innovation or those in which innovation is limited to research projects.
In different types of projects, attention and focus will be directed toward
certain aspects more than others, but the concept of value for the end cus-
tomer, attempting to recognize what is added value and what is not, is criti-
cal in all contexts.
Drawing inspiration from the habits of a number of world-class compa-
nies, we have devised, and successfully used in many projects, a process for
defining value for internal and external customers in the initial phase of a
Figure 2.1 Logic diagram of the interaction between customer satisfaction and
product development. (Source: Ulrich K. and Eppinger S.D., Product Design and
Development, McGraw-Hill, 2004.)
Figure 2.2 Synthetic table of the various types of product development. (Source:
Liker J.K., The Toyota Way: Fourteen Management Secrets from the World’s Greatest
Manufacturer, McGraw-Hill, 2004.)
project, particularly from Toyota. This process is laid down in a document

called the Concept Paper. The term Concept Paper originally came from
the initial project document created by Chief Engineers at Toyota to suc-
cinctly define their vision for the end product from the customer’s point of
view as well as critical specifications that are not negotiable. It also includes
milestones and timing, cost targets, and other relevant targets such as fuel
economy and weight. It is presented by the chief engineer in a large meet-
ing to all key participants, including key suppliers, that launches the prod-
uct development program.
The main aim of the Concept Paper is to explicitly state the voice of the
customer and help align processes, people, and tools before commencing
any project activity. Getting down on paper what awaits us before begin-
ning to develop the product, through a structured process of sharing, might
appear to be similar to many other documents generated at other compa-
nies by marketing or project leads. However, we will see that it is more than
a document. It can help the project team to tap into the social dimension
of the process of sharing, articulating, and building consensus on the key
points necessary for clarifying customer needs.
Processes ◾ 41
2.2.1 Forming the Project Team and a Sample

Concept Paper Format
Whatever it is called in a given company, each project’s Concept Paper
needs to contain clear information about the target customer, the product
vision, key product characteristics, who does what, who will lead the proj-
ect, who will sponsor it, who is part of the core team, and who is part of
the broader team. In some organizations that follow Toyota’s chief engineer
system, this is only signed by the chief engineer. In other cases, it will func-
tion as a team charger and all key stakeholders will need to be in involved
and agree about the description of the project, its purpose, the main objec-
tives, the time scale, the key trade-offs, the main known risks, and the miti-
gation plans. This will then have to be formally approved by all stakeholders
via signatures. Thus far, there is nothing new here, for well-organized
companies.
But this is just the tip of the iceberg: what is different from a conventional
approach is not the use of the format. The difference is in the way a com-
pany uses the process well, namely, in what lies behind the scenes, in what
cannot be seen, which is the work involved in preparing the document. For
more complex projects, the process may take many months—the process of
sharing, and the in-depth analysis of the questions we are forced to ask step
by step, if we are truly using a structured process. Welcome to the world of
real processes, where what we do and say every day counts much more than
what is written down in some text or other.
2.2.2 Who Guides the Process?

The first question that needs to be answered, before embarking on a proj-
ect, regards the owner of the project. The chosen person must be able to
deliver the value to the customer while fighting to reduce waste in the Value
Stream as described in the previous chapter. In some companies this person
is called the Chief Engineer, to indicate the profile that covers the responsi-
bilities both of a Project Manager and those of a genuine system integrator.
This person will deal with management issues on the one hand, while on
the other he or she will have to integrate the technical parts of the product-
system that need to be developed.
To get a better understanding of why it is best to have a single leader,
let’s consider a number of factors fundamental to a project’s success.
Generally, a product is the result of the contribution and point of view of
many people in a company. Questions, opinions, and answers are bantered

about the organization, which are not always shared or vetted by the various
contributors to the project.
Marketing people, for example, ask questions and come up with answers.
The designer does the same thing, and the manufacturing representatives
continue after them to ask further questions and to find their own answers.
But what we see too rarely in many projects is that there are “community”
moments, during which questions are raised and tackled together at the
root, with a shared response that takes account of a multiplicity of needs.
To be effective, someone needs to be the focal point and drive the team to
decision or ultimately make the decision themselves.
2.2.3 Product and Market History

Before describing where we want to go with the product, it is always a good
idea to think about what has already been done up until now in the market-
place with our product and our competitors’ products. This will help us to
better understand the characteristics of the current product in relation to its
market history and the reasons that are now prompting us to think of a new
product line.
In this phase, it is important to clearly define the link that exists between
the nascent product and the company’s strategy.
2.2.4 Who Will Use Our Products?

We need to ask who our targeted customers will be and how will they use
the innovative product or service we are proposing to deliver to the mar-
ketplace. Often, to answer these questions we need to get close to the end
users to gain firsthand knowledge of what they desire.
This phase is clearly very important to be clear about what the added
value will be for each of our customers. Frequently these questions seem
rather trite, and are quickly passed over, the assumption being that we
already know the answers. In the best of cases, just a small proportion of
companies come up with answers, and there is a tendency to forget that the
same questions can yield different answers according to the different points
of view of possible end customers.
The value of a product can only be defined from the point of view of the
end client. It is necessary to understand the real needs of the client, so as
to supply a specific product and/or service capable of satisfying consumer
Processes ◾ 43
needs at a given time and for a given price. Only when this step has been
taken can the identified needs be matched with the company’s capabilities
to respond to them.
When we lead workshops in companies, with the aim of drawing up
the Concept Paper together at the beginning of a new project, we often
end up taking on the role of moderator and facilitator in what are some-
times quite heated discussions. The same questions often elicit different
responses from people belonging to different departments sitting around
the same table. Who is right? Through guided discussion, it emerges clearly
that there is not a single, exhaustive answer to the same question. Each
group is listening to the customer and seeing them from a different per-
spective. Making the effort to interpret the answers from customers, and
above all, to align all the answers before commencing the project becomes
critical to the success of any project. Otherwise, the unresolved problems
and conflicts will continue to lurk beneath the surface, ready to reemerge
and generate a churn of waste further down the line in later phases of the
project.
2.2.5 Classification of Product Features

Questions regarding the requirements and functions desired by the customer
should be a healthy debate early on about which features of the product are
musts, those whose absence would not be tolerated by the client. This set of
features must include the ones that are necessary to make the product indis-
pensable and unique for the customer who buys it. Arguably, these are the
distinguishing features, if done well, that give a company its strategic advan-
tage over its competition. On the other hand, other features may be consid-
ered nice to have, but which the client could do without if needed. Clearly,
the project should strive to deliver as many nice-to-haves as is feasible to
gain goodwill with the customer. However, the trade-offs for the nice-to-
haves should always be weighed with the risks to the project. If consensus
is not done early on in the project to prioritize the features, this can lead to
over or under engineering the product for the desired customers. This will
result in waste of company time and resources, and extra costs—because
the failure to establish priorities at the beginning can give rise to conflicts in
later stages of the project or worse, if left unresolved, can lead to lost sales
by not delivering the right product to the right customer at the right time
at the right cost. Mutual understanding and alignment, prior to full project
launch, about the must features, the nice to have ones, and those which
should actually be excluded from the product or service, the must nots, is
very important in order to prevent future conflicts in the project itself.
2.2.6 How Can We Understand What the Customer Wants?

When Luciano worked for a strategic consulting company, his desk was
often piled high with huge folders containing market surveys designed to
analyze and explain customers’ new needs, which had to be satisfied at all
costs. They contained an incredible amount of data and analyses of virtual
needs, which often ended up substituting understanding in the field of what
the real needs and problems of the customer might be.
In some Japanese and American companies, we discovered a happy
return to pragmatic common sense. In Toyota, they talk about Genchi
Gembutsu (in the United States, Go and See) as a fundamental principle of
Lean thinking. “Go, see, and touch”—as an antidote to too many words,
even when dealing with unknown or intangible characteristics that are hard
to describe.
This concept holds true for the whole customer and supply chain
involved in developing a new product. Some of the innovative features intro-
duced in Toyota cars in the American market stem from such an approach,
which was put into practice directly by their chief engineers. Some went
to see how drivers parked their minivans at the school entrance, what they
really did with their vehicles, how they opened the car doors, and what
their most frequent actions were. Others went driving for a whole week in
the United States and Canada to see firsthand what difficulties drivers face
when there are rapid temperature changes, impossible road gradients, and
long stretches without any gasoline or rest services. These are all things that
are hard to appreciate with a marketing survey or a written interpretation of
needs by someone in the business or marketing department.
Often customers themselves do not know they have a certain need,
and would not even be able to put it into words. So, a return to the root
of things, the “Go & See,” enables us to interpret needs from the customer’s
point of view, as it would never be possible by pouring over reams of data
and paper. Going back to “seeing for yourself” is something that even well-
researched papers will never be able to replace. So, while many companies
go through the motions of capturing requirements to varying degrees of
completeness and clarity, what is almost always missing is an overall picture
of the real processes and habits that underly the development of a good
Concept Paper: the process of identifying the customer’s needs firsthand, the
Processes ◾ 45
process of sharing, consensus-building, and alignment within the company

itself.
In this phase of the projects, the project leader/chief engineer should be
“obliged” to go out into the field, to get to know his or her clients, trying
to really understand both the poorly satisfied needs of current products,
the strengths and weaknesses of the competition, and any new needs
that might be satisfied with a new product in the marketplace. Without
this necessary step, it is impossible to ensure that we are pointing our
resources in the right direction to provide the right product features to the
customer.
2.2.7 Radical Sharing

There is a process, which the Japanese call nemawashi, based on the meta-
phor of cultivating the roots of the tree, which refers to going person by
person to get consensus on an idea. You can readily imagine that as moving
a tree from one spot to another: it is necessary to extract the roots, prepare
the terrain, organize appropriate transportation and conveying, and to take
care when handling the tree. If these actions are not performed with due
care, the risk of the tree dying off is very high. Doesn’t the good prepara-
tion of a project, so it can be accepted in all the groups within the company,
taking into account internal constraints, while best meeting the customer’s
needs, deserve the same attention upfront that can be found in the Japanese
concept of nemawashi?
Besides customers outside the company, the Concept Paper must make
an effort to embrace the needs of the in-house clients as well. The Chief
Engineer has to go and see what the needs are firsthand, talking to the
people involved, such as the designers, the production engineers, and the
assembly-line workers, in order to understand what their problems are and
to translate them into a document that might, in formal terms, look very
similar to many others, but that in actual form becomes an accurate and
coherent snapshot of the world of needs, internal and external, that have to
be satisfied.
2.2.8 The Importance of a Single Unified Vision

The Concept Paper is most likely to be coherent and effective if written
by a single person. Even great books tend to be written by one person.
If there are several authors, one is the primary author who integrates the
ideas of the others. In companies, too frequently, a product or a service

requirement are written in various parts by several “co-authors” including
the marketing, design, commercial, logistics, and production departments.
While all the aforementioned groups are experts and provide very insight-
ful contributions, what is often missing is the integration of these chapters
into a single product view. The role of the integrator—the Chief Engineer,
Project Leader, Team Leader, Project Manager, or whatever else it might
be called—has, through the Concept Paper, the task of producing a single
photograph of the target value for the client: the final story. The global
vision of the integrator is extremely important because he or she is the
one who ensures the “paternity” of the product, which is much more than
just the bureaucratic management of the project. This figure moves forward
from just the traditional role of project management and becomes the real
parent of the product, the person who really knows how the end client
will use it, who will guide the product through the development, and
who manages, with that single clear photograph—the Concept Paper—to
represent an overall vision the team needs to achieve. This person must
possess both management skills and technical knowledge of the product
to be launched, so that the activities are carried out well and with mini-
mal waste. He or she must also be capable of retaining the right degree of
flexibility with regard to the objectives themselves, because if they are too
rigid they might impede the innovative new solutions, just as overly “soft”
objectives might not give due value to the potential of the product. An
excellent integrator assigned from the beginning and who will carry the
product to the market undoubtedly makes a significant difference in the
success of the entire project.
2.2.9 One Product or a Family of Products? The Right

Choice Could Bring Big Benefits (and) Savings
During the elaboration of the Concept Paper for the new product or ser-
vice, it is a good idea to understand whether the product we are thinking
about will be a single item or the offspring of a platform, or if it will be the
brother or sister of another product. This analysis at the beginning of the
development phase is very important because lots of opportunities can be
exploited that would otherwise remain buried by our habit not to do such
analysis. We have often seen this methodological step done hastily and
badly, or even skipped altogether. We have seen companies forget or not
consider the fact that a model might be developed today and, in the space
Processes ◾ 47
of just six months or a year, another “variant” of the first one then has to
be developed which, unless it is just a case of making additions or simple
variants, can lead to lots of inefficiency and waste. Asking what options
might be requested or made available for the customer, and what additional
modules might be necessary, may put us in a position to develop a full-
blown platform with optional modules that can ultimately provide a variety
of choices from the point of view of the end client, with a minimum effort if
the platform itself is designed well at the start of the project.2 Understanding
if the product is the first of a line of future products or not can radically
alter its architecture and lead to a modification of the way the project itself
will be managed.
In one of Luciano’s projects, a discussion was going on one day about
the shape and attachment method for some functional-aesthetic covers
for a complex piece of industrial machinery. The group of technicians
of the cover supplier, together with a client’s mechanical designer, were
working on a solution for a single machine model, for which production
was due to commence a few months later. Luciano decided to interrupt
their discussion by asking a few simple questions. To what extent could
those covers be reused for future models? How easily replicable would
the attachment solution be? Were the molds for the production of the
covers sufficient for the production of other models as well? At first, this
battery of questions upset them. The immediate response, as in many
other cases, was that there was no time to think about such matters. But,
after moving beyond this stock answer, the group changed focus radi-
cally, and in the end it was even decided to slightly increase the number
of components for the model, but with the effect of reducing the total
number of components for the whole product family, given that the cov-
ers were in fact going to be reused. It involved a slight increase in the
cost of that model, but a significant reduction in the cost of the whole
product family: from the total number of components required to the
cost for the supplier of producing the dies, the time employed by the
designers and technicians, the cost savings of future development, and in
logistical and maintenance costs. When the focus was shifted from what
we will need to do in six months or a year’s time to the long-term view,
even if it may not be currently considered urgent, technical innovations
can be unleashed leading to great cost reductions over the whole value
chain.
Doing things well takes as long as doing things badly, but a great deal of
time and money is saved afterward.
2.2.10 How Can We Standardize the Use of Product

Components to Reduce the Final Cost?
The same kind of consideration is needed for every question of which com-
ponents of the product-system can remain fixed and which should not. This
is extremely important in order to ensure that the parts themselves are well
designed. It should be borne in mind that the cost of a product will always
be made “heavier” by the following three factors.
1. The single piece cost: this is the closest relation to the conventional cost
of the product. Materials and direct expenses for obtaining the single
part.
2. The cost of management: costs associated with the administrative man-
agement of the part, ranging from purchasing to logistics, from the per-
son who has to manage the bill of materials to the one responsible for
storing data, specifications, and designs. These costs often end up being
lumped together under overhead, thereby hiding them from where they
were generated.
3. The cost of variety: when we evaluate the impact of that same part
throughout the range and the platform it belongs to, consider the vol-
umes and the total number of parts linked to each other.
Often, when working on projects, the focus remains exclusively on the

single piece cost, with the attempt to optimize a part, for a given project.
Asking right from the outset how we can put all the costs on the scales of
the decision-making process, from those of the whole production chain
to those of the individual model, from those of the entire range to those
incurred for the management of those models, brings us closer and closer
to the objective of the minimum Total Life Cycle Cost of the family of prod-
ucts and not just to the optimization of part for a given project, which rarely
guarantees the total minimum.
2.2.11 How Can We Establish Goals at the

Beginning of the Project?
When we establish the goals to achieve in the project for a new product or
new service, little attention is given to the “dynamic” aspects of the context
in which we are operating. It is important to break the objective down into
its component parts:
Processes ◾ 49
1. Cost goals
2. Performance goals
3. Product/Service Features desired
It is equally important to compare the goals regarding our future product

with those of our current product, and with the objective data of competi-
tors’ products. In this section of the Concept Paper, we strive to understand
the conflicting goals and reconcile them as best we can. The company may
already have some feeling about these trade-offs but it is best if they can be
quantified. Some companies, such as Toyota, have made trade-off curves,
that is to say, correlation curves between the different functions of the prod-
uct itself. For example, weight versus fuel consumption, number of compo-
nents and cost, quantities sold and costs, etc. Why is this done?
Because in real life it is unlikely that all the specific conditions under
which we have established the assigned goals will not be challenged during
the project either due to technology or cost considerations. Something will
change. This is the reason why it is always a good idea to establish project
targets in terms of a range rather than as single point values. This makes it
possible to look for solutions with greater flexibility, finding the most suit-
able project areas within the given range. For example, if we are develop-
ing a new training course, various things that will influence our costs and
revenues may change, from the number of participants to the cost of the
instructors, from the cost of the marketing required to promote the course
to the costs of the sales structure needed to sell it, from the costs of rooms,
hotels, and catering to the cost of handouts to provide the participants. If
we are developing a new iron casting, there may be changes in the unitary
costs of the cast iron, the weight, the performance of the product in rela-
tion to the type of iron used. Giving due consideration at the beginning of
the project to possible variations in the main factors governing costs and
revenues of the new product, and above all to how these factors influence
each other, provides a much more complete vision of the risks and oppor-
tunities that can move us toward or away from our goals. Another benefit
of this approach is we gain knowledge on how the sensitivity of the value
of the product changes with regards to varying certain parameters. This will
help us in the project to make better decisions based on a series of data and
facts. In addition, this knowledge is sometimes called the knowledge curve,
in that it often reveals the existence of genuine gaps in our knowledge that
need to be filled with further data analysis during the project in order to
gain the full picture.
If, for example, we consider the development of a new car, it is not hard
to understand that if its target speed increases, the amount of noise it makes
is very likely to increase, and the aerodynamics and, ultimately, the cost, will
definitely vary. Without precise knowledge of how these parameters and
what the areas of shared acceptance of the various parameters are, it will be
difficult to make a sound decision based on facts. Rather, there are likely to
be hold-ups, time-consuming discussions, misunderstandings, and wasted
time during the project trying to re-align goals (or expectations) or worse a
risky decision will be made based on “gut feel.”
Making an effort to quantify the trade-off curves early in the project
together with the objectives will help us to understand and avoid areas of
risk, just as it will highlight what opportunities there may be. At the same
time, we can create a map of the main cost drivers and of the characteris-
tic functions of the product, that is to say, the factors whose variability can
affect costs and sales. This more in-depth analysis upfront will make it pos-
sible to move forward more quickly during the development phases of the
product, with a greater awareness of the key factors affecting the competi-
tiveness of the product on the market. And the trade-off curves can become
part of the knowledge database for other development programs.
2.2.12 Why Choose One Goal Value and Not Another?

Besides an analysis of the trade-off curves, there is another even more criti-
cal question that needs to be dealt with while defining the goals: why one
numerical value and not another one? Generally, the numbers are defined on
the basis of a utilitarian logic of profitability or statistics.
The decision to improve the performance or to reduce a cost by 5%, 10%,
or 15%, for example, compared to a previous model or to the competition,
does not always follow the logic of the future client’s perception of value, but
that of internal improvement or optimization.
Let’s look at the chart listing the established goals for the successful
launch of the Lexus LS400 in the United States (Figure 2.3).
We can notice something quite singular here. The maximum speed target
was fixed at 250 km/h, compared to 222 km/h and 220 km/h of the BMW
and Mercedes models, the main competitors in that bracket, while the other
characteristics were not set so aggressively in percentage terms. Why? They
could have decided on 223, 230, or 235, but the maximum speed value was
fixed very high so customers could appreciate the marked difference of the
characteristic to which they attribute value in that particular sales bracket.
Processes ◾ 51
Figure 2.3 Synthesized table of the Lexus LS400 target compared to the two tar-
get vehicles based on 4.2L engines. (Source: Liker J.K., The Toyota Way: Fourteen
Management Secrets from the World’s Greatest Manufacturer, McGraw-Hill, 2004.)
Only in this way could the car stand out clearly from the others. It was part
of a series of winning decisions. Lexus blew away the competition, not so
much on price, but on the much higher perceived value for the price com-
pared to the competition in the United States. Fixing the goal at 250 km/h
represented a level that was spot-on in relation to one of the most important
needs of the target customer, unlike other characteristics, like the degree
of silence at high speed—which, as you can see, is much closer to the
Mercedes and the BMW—or fuel consumption. The shrewd choice of a goal
to achieve, made through the eyes of the end customer, also helps in the
delicate stage of the internal buy-in, namely, the phase in which the objec-
tives have to be “accepted” within the company, not on the basis of orders
from high or bureaucratic instructions, but on more negotiated and shared
grounds, especially when very aggressive targets are involved. During this
phase, we not only want to cascade objectives but we need to communicate
to the project team why the targets were set at those levels so they can be
better motivated to strive to achieve them.
When a project is being conceived, this phase is sometimes done too
quickly, with a tendency both to lose sight of the point of view of the end
customer, which translates into the loss of many opportunities, and to lose
credibility within the company itself in the event of failures or difficulties in
achieving goals that are incoherent or ill-defined.
When we talk about this example during seminars or in the course of
Concept Paper workshops in companies, a number of questions recur fre-
quently. We will examine these in the following sections.
2.2.13 Are These Objectives Really Achievable?

One question that springs to mind is why Mercedes and BMW did not set
their target at 250 km/h.
The answer relates once again to the process through which the Concept
Paper is elaborated, and not to the piece of paper as such. Toyota’s Chief
Engineer, in this case, took the approach of “no compromise.” He firmly
believed that he could achieve whatever aggressive targets he set and break
through constraints. like high fuel economy means low power output. He
knew he had to be the leader to convince people to stretch beyond their
comfort zone and was willing to take that responsibility. Often. a goal is
considered aggressive simply because it upsets an ingrained habit, a com-
mon-held belief or a conviction regarding the technological or scientific
state-of-the-art, which then ultimately proves to be surmountable.
The more a company manages to sweep away these common-held
beliefs, making itself unique in the eyes of the customer, the more it will be
perceived by the market as innovative and providing a much higher value
to customers. If there are competitors in the market, comparing the value
attributes is relatively easy, providing there is a willingness to challenge the
status quo and to really place oneself in the customer’s shoes, as was the
case with the Lexus, which at the time was a real breakthrough. It was an
example not only of technological innovation that blew past the company’s
competitors at the time, but also of an intelligent and pragmatic definition of
goals really able to meet customers’ deep expectations.
Figure 2.4 contains a succinct scheme of the objectives for the Lexus
LS400 project set by the Chief Engineer, Mr. Suzuki.
Sometimes, the goals of a complex project may appear to be in conflict,
giving rise to various dysfunctions and waste within the working team.
Placing all the objectives on the same plane could be counterproductive and
sometimes even paralyzing. In the LS400 example above, they used “yet”
instead of “or” and, through the passion of the chief engineer and the pas-
sion of the various engineers and teams, broke through paradigms.
Processes ◾ 53
Figure 2.4 Summary table of conflicting objectives Lexus LS400. (Source: Takashi
Tanaka, Lean Transformation Summit, London 2008.)
2.2.14 What If We Are Already the Market Leader?

When we are already at the top, as the market leader, the only way to pro-
tect that position is to challenge ourselves, both by activating internal pro-
cesses so as to continually innovate to surpass our limits, and by drawing
inspiration from other markets and technologies. Take the example of com-
panies that introduce strong technological innovation borrowed from other
sectors. Hybrid cars are a good example of this concept. But, once again,
we need to be sure that the client remains the focus of our attention, even
when we are engaged in a bold project of technological innovation. Can you
remember the first hybrid car that came onto the market? We are almost all
tempted to say it was the Toyota Prius, forgetting that it was Honda, with
the Insight, that brought out the first hybrid car in 1999. Why didn’t it have
the success it deserved? In fact the small, two passenger Insight was a flop
at the time, if compared with the success Toyota had a few years later with
the Prius. Honda had shifted its focus heavily onto the technological aspect,
supplying a car that functioned very well, had many exceptional features,
and state-of-the-art technological performance. However, very little attention
was given to what we have been talking about so far. There was little con-
sideration of how the customer would use the product, how much space he
or she would need in the trunk or passenger cabin, for example. The robust
process of defining customer value carried out by Toyota, on the other hand,
protected the company from this error. Asking the right questions meant that
the Prius, for example, had four doors from the outset, a good sized trunk
and many other characteristics that led to it being accepted immediately by
the market. It was an unrivalled commercial success that once again left
competitors trailing behind.
The term used nowadays in the United States is a Package of Customer
Value, which brings together all the characteristics of our product, as
opposed to exclusively technological considerations, which often lead com-
panies to lose sight of the overall vision. Consider the success of products
like Apple’s iPhone. Though it is not technologically superior to many other
products on the market, it has managed to interpret customers’ needs, giv-
ing them emotions and value perceptions that, overall, are far superior to its
competitors, thanks to the concept of the Package of Customer Value.
All too often we have seen the traditional equivalent documents of the
Concept Paper, such as the specifications and a business plans, done and
then left largely by the wayside during the phase of development. This
means that in reality every time the team has some doubt about the initial
targets or assumptions, the whole project goals have to be re-discussed and
useless meetings held. By contrast, when the Concept Paper is done well,
quite irrespective of its format in fifteen to twenty-pages, the initial degree
of alignment of the team is so high as to provide an incredible momentum
to the project. In the daily life of the project, the synthesis of the Concept
Paper will then take shape in the project room, also called the Obeya (big
room), where the objectives are stated in documents on the wall “in the
face” of the project team. In the following chapters, we will see how the
project room is developed and what advantages it offers.
Besides the content associated with the product/service that the team
intends to develop, the Concept Paper should also clearly include the project
plan, project organization, how trade-offs will be arbitrated, and any other
internal rules that the team will subscribe to before the project becomes
operational.
2.3 Concentrating Efforts at the Beginning of a Project

The human mind is like a parachute. It functions better when it is
open.
Albert Einstein
Oppressed by the pressing sense of emergency prevailing in almost all the
activities we do within and outside a company, it becomes very difficult to
adopt the principle that has enabled hundreds of famous people and teams
Processes ◾ 55
to achieve project goals on time and within allocated budgets. It is a rule

that should be applied in the launch of a physical project, as in the develop-
ment of a new website or a new software package, a new training course,
or an insurance service. The principle requires discipline, creativity, and
leadership: concentrate efforts at the beginning of the development of a new
project in order to thoroughly explore alternative solutions when there is still
the maximum scope for creativity. This principle provides the team with the
time to use their intellectual energy to find those groundbreaking innova-
tions that will please our future customers.
Seth Godin, a world-famous marketing guru, the author of scores of
bestsellers translated in over twenty languages, and founder and CEO of
Squidoo.com, approaches his projects as follows.3 He uses the term thrash-
ing to describe the activities of this phase of the project. Tearing to shreds,
firming up, attacking, and bludgeoning are all activities that, metaphorically
speaking, should take place early in the development phase. The Japanese
often use the term Kentou, the “study” of concepts. We always ask teams
to go looking for conflict when there are trade-offs to deal with and when
it not only costs the company very little but can also yield solutions with
lots of added value precisely because we are at the beginning of a project.
Unfortunately, it is much more common to see conflicts, debate, debug-
ging—thrashing—when a product has already been created. For example,
when the software is close to being delivered, when any modification of the
physical product will entail considerable extra time and expense.
To do what Godin suggests, and what is done in practice by firms that
apply Lean Development, we need to accept a number of changes in our
approach:
1. The greatest effort must be made during the first phases of the develop-
ment of a new product. Historically, it is not unusual to use 15%–20%
more resources in the industrialization phase than planned to rework
designs and get the product to launch. Instead, we should front-load
our efforts to design in the right solutions and thus these resources will
be “saved” the effort and frustrations frequently found at the end of the
project.
2. Parallel development of more than one solution rather than develop-
ing and iterating on a single concept from beginning to end. This can
yield innovative solutions especially in the conceptual and preliminary
planning stage, but can also be beneficial in the latter phases when the
projects are high risk.
2.3.1 When Does a Project Really End?

If you look at the graph in Figure 2.5, you can see the different way of
using resources in the two different approaches. The traditional approach is
indicated with the pale shading, the Lean one with the darker color. With
the Lean development approach, you can see that more resources are used
at the beginning, but the work is completed on-time and, above all, there
is an almost total absence of reworking after the end of the project. With
the traditional approach, on the other hand, there are few resources at the
beginning, but a whole heap of them at the end, and frequent re-workings,
hold-ups in the work, and various instances of debugging that keep the
whole team occupied much longer than predicted.
Besides Toyota, companies like Harley-Davidson, Ford, and Schumberger
are now making increasing use of what is known as frontloading in the
development of new products. This means committing more resources at the
beginning so as to tackle from the outset all the potential risks and oppor-
tunities, as the end goal is to obtain a reduction in time and in the overall
resources spent on the project. In our experience with projects, however, we
have almost always had to deal with something rather particular. The per-
ception of project duration is almost invariably very distant from the reality
of what project team members experience.
Often, the project is erroneously considered to be finished when it is
delivered the first time. Unfortunately, frequently resources are then com-
mitted to modifications and yet more modifications, but these are no longer
thought to be part of the project. Finally, you see “swat” teams being set up
to deal with constant problems regarding quality, costs, or product perfor-
mance. At this point, these are no longer regarded as part of the develop-
ment, but as normal, on-going product “improvement” which is frequently
hidden in the overhead costs of the product.
Figure 2.5 Comparison of the use of resources over time in a traditional project
compared to one after Lean has been implemented.
Processes ◾ 57
We have been engaged for months in task forces where millions of dol-
lars are spent on tinkering with products that have already been launched.
But if perhaps we had spent several extra tens of thousands of dollars more,
a few more weeks, and a few more resources in the early phases of the
project, we would have avoided the task force, or at least drastically reduced
the devastating effects. Often, these events are disassociated from the fact
that a project has not been well managed at the beginning. In the best of
cases, nothing is done to remove the causes of this waste, but instead, head
down, all-hands efforts are done to quickly remove the negative issue of the
moment. So why does this often happen?
2.3.2 Starting Out Already Late

Sometimes when we start a project, we are already considered to be late,
because we usually start from the final deadline decided by the product
plan. We then proceed to work backward, defining the activities involved:
production, launch of production systems, prototyping and industrializa-
tion, planning, exploration of concepts, definition of the project specifica-
tions, and team formation. Here lies the paradox: if the initial phases—the
Concept Paper and Kentou—have not been tackled thoroughly, it will be
hard to define exactly what to do further downstream to satisfy the needs
of the client on the one hand and the company’s budget on the other. We
find ourselves beginning a project already with very little time available and
without having a precise idea of what to do.
Figure 2.6 illustrates the difference between the two approaches in terms
of relative time. The short time allocated for initial, in-depth consideration in
the traditional approach, as represented by the Concept Paper and Kentou
phases, will has a snowballing effect in terms of more protracted develop-
ment and industrialization phases. In contrast, the aim of the Lean approach
is to make the latter two phases be more quick and efficient, by committing
resources and creativity in the initial phases to design in the right solutions
rather than deferring the solving of problems to the latter phases.
2.3.3 The Problem of a Sprint Start

Once started, something happens that silently undermines the controllability
of the duration of all projects: a series of small, interminable iterations. We
choose one of the possible solutions that we think can satisfy both the cus-
tomer and the budget. We design it, develop it, and submit it to any one of
Figure 2.6 Difference in the approach to product development between a Lean proj-
ect and a conventional one.
our co-developers within or outside the company: marketing, styling, quality,
production, etc. Virtually every time some issue arises, a loop of iterations,
modifications, improvements, and redesigns then begins. In these occasions
invariably arise, from inside our company structure or from outside, observa-
tions that force us to rethink our design in some way. Either a comment to
the effect that the pieces cannot be assembled well, that the form we had
conceived is not good for the marketing people, and so on. And so we go
back to the drawing board, experiencing a Stop and Go waste that amounts
to a “circling around the solutions” (Figure 2.7).
If this phenomenon is multiplied according to the degree of complexity
of the product and of the company you are part of, it will be clear why the
majority of projects can quickly spiral out of control. In these conditions,
it is almost impossible to define the standard duration of the events of the
project itself due to this repeated circling. Projects are managed almost with
the expectation that some surprise is lurking around the corner and that we
will “find a way” to get back on track.
On the surface, we have a sense that we have a bias for action and we
can get started straight away without stopping getting caught in organiza-
tional paralysis, but in reality it is not possible to predict either the duration
of iterations, nor how many there will be, given that the phenomenon can
recur frequently with a variety of subjects along the development path. The
conclusion of all this is that the only thing we can be sure of is that we will
not be able to say in advance when and how we will finish our projects.
Processes ◾ 59
Figure 2.7 The sprint start requires a complex series of successive iterations and
optimizations.
2.3.4 Iterative Models and Convergent Models of Development

If it is true that Lean transformation starts from our way of thinking, the
model for creating and developing new products and services may paradoxi-
cally seem more confused and complex than the traditional one, because
it forces us to open our minds and to consider, in the face of a single chal-
lenge, a wide range of possible solutions that have to be dealt with at the
same time and from the outset.
What is presented in university courses as one of the most potent
“heuristic” scientific models for the development of a solution, the itera-
tive model (Figure 2.8), turns out to be quite ineffective and a great
source of waste in a real and complex context like that of many com-
panies, in which the need to satisfy multiple needs are spread inside
and outside the company. By contrast, the convergent model, the same
one applied by Seth Godin, forces us, especially when we are tackling
an innovative project, to pull lots of alternative solutions out of the hat,
immediately involving all the possible contributors to the innovation as
soon as possible. Let’s consider what happens when we have already
built the equipment for the assembly line, when the product is almost
on the market and we realize that something is wrong. Well, we begin
to do cycles of modification, accepting whatever costs are incurred
because we can no longer avoid them. In other words, we have to make
Figure 2.8 The iterative model of product development.

the solution work given all the constraints that are now imposed in the
system. So much for fluidity and creativity and welcome to the world of
firefighting!
This holds true not only when a physical product is being developed, but
also for the planning of any kind of event, even in our everyday lives, when
our choice is just one of various possible alternatives.
If, instead of accepting the best idea that comes to mind at a given time
and doing it (and assuming, apart from anything else, that it is not possible
to do any better), we were to stop and exchange ideas with others, asking
them for further alternatives and additions, talking about different possible
alternatives, and understanding the pros and cons of individual alternatives,
we would understand that what appears superficially to be a waste of time
is in fact an advantage, a clearing away the possible consequences of mis-
taken or imperfect choices and converging (Figure 2.9) to the best solution
for our customer and our company.
2.3.5 Kentou and Set-Based Concurrent Engineering in Practice

The best way to get a good idea is to get a lot of ideas…
Linus Pauling
If we wanted to fix an appointment with an extremely busy person as
quickly as possible, what would we do?
Undoubtedly, if we were dealing with someone who really is very busy
and we were trying to get an appointment, succeeding at the first attempt
would just be good luck. It is much more likely that we will have to try
Processes ◾ 61
Figure 2.9 The converged model of product development.
several times before succeeding in finding a free time slot. What can we do
to cut our wait to a minimum?
We could propose a list of possible alternatives that are already okay for
us, because the more alternatives we offer, the more likely it is that at least
one of them will suit our busy colleague as well.
In fact, this is the guiding concept behind the principle of Set-Based
Concurrent Engineering,4 a proven method for every kind of product to be
developed or for when we need to innovate to resolve a problem.
With Set-Based Concurrent Engineering there is a gradual progression
from a large number of solutions to a single one for production. Through
successive restrictions of conceptual parameters of design, we converge to
the optimum solution that simultaneously satisfies in the best possible way
the different spheres of feasibility of the various functions, and more impor-
tantly, meets the needs of the customer.
As we have already said, having the goal of creating different alternatives
makes us invest more time initially, but it enables us to move a number of
solutions forward, some of which will be gradually discarded during future
integration events. These act as filters, the purpose of which is to permit
methodological verification and also to develop an awareness of going with an
optimum solution for everyone and not just for some, before moving on to the
next stage. During this filtering process, some solutions are always excluded in
favor of others, but the ones that are dropped remain in the project database
as these learnings could be possibly reused in future projects.
In the course of the project, the set of different alternatives will open and
close, radically changing the classical way of organizing in the exploration
phase of projects. This will also help to create a mechanism for learning and
for shared knowledge that will tend toward the maximum degree of satisfac-
tion and added value both for the project that is under way and for those
in the future, making the accumulated knowledge available in a structured
manner.
2.3.6 Development Teams Based on Modules

In Lean companies, we can collapse the complexity of product develop-
ment into two phases: a phase called Kentou or study phase, and a phase
of simultaneous realization, which includes detailed design and industrial-
ization. In the Kentou phase, the work is divided between various Module
Development Teams (MDT), whose goal is to develop a subsystem of the
final product. Each team is asked to come up with the highest number
of possible solutions. MDTs are small cross-functional groups responsible
for part of the system. In a car, an interior, for instance, there may be two
designers, an assembler, a process engineer, and sometimes a supplier.
This study phase is where concepts are explored, and then narrowed
down to a manageable number or one. It is fun and creative, and highly
inclusive of groups in the company that traditionally are hardly ever
included so early on in the development of a new product. It gives rise to
descriptions, sketches, and drawings that are sometimes not even dimen-
sioned. These concepts that are generated by each of these subgroups are
done with the aim of seeing what possibilities can be put on the table to
achieve the same project targets in accordance with the Concept Paper.
This activity is carried out before establishing the definitive product con-
cept that will then be developed and produced. The presence and the
coordination of the Project Leader or Chief Engineer are strategic in this
phase, because this person must see to it that the finished product targets
(System Targets) are transformed into the sub-targets of the different mod-
ules (Module Targets), making sure the subgroups are sufficiently indepen-
dent, but without ever losing sight of the interfaces between one module
and another. For example, in designing a vehicle, the subgroups are tied
to some parts of the car and sometimes have goals that appear unrelated.
The goal is to give maximum freedom to generate different possible solu-
tions, precisely so as not to limit people’s creativity in a phase that is left
deliberately fluid. The Chief Engineer’s role then becomes one of system
integrator to work with their module teams to find the best system-level
solution for the customer.
Processes ◾ 63
2.3.7 Reuse of Existing Solutions and Knowledge

of Previous Critical Areas
Many companies are discovering that one of the greatest opportunities for
cost savings in design and manufacturing is reuse of standard parts, as well
as developing multiple products from common platforms and architectures.
In the case of Ford’s renaissance, since near bankruptcy, the head of body
engineering, Jim Morgan, displayed multiple vehicle hoods with the top
sheet metal torn off. Half were Toyota-Lexus models and half were Fords.
Each Ford hood had a different architecture for the supporting steel struc-
ture under the skin and for Toyota they were all identical. Developing stan-
dard architectures and parts saved Ford billions of dollars.5
Before beginning to invent new components or services, questions should
be asked as how much can be recovered from solutions currently being
used from previous solutions explored by other projects, but applicable in
the current project. In this phase, it is important to ensure the MDTs have
sufficient freedom of movement, and not to rush things too much, leaping
hurriedly into the design and producing a sub-optimum solution, overcome
by the anxiety to “get cracking.” It is important in this phase to go and see
firsthand what we have on the shelf, how the modules we are working on
are used and produced in the plants, to get to know in practice the real
problems that each component has in the real world, to see how their inter-
nal customer uses and produces these components. For example, go and
talk to the assembly team on the line to understand what problems they had
in earlier experiences of assembling the components we are designing. This
type of activity is not left up to the good will of the individuals, but is done
in a unhurried and systematic fashion. The same applies when the interac-
tion concerns outside suppliers. If we are designing a piece that will be pro-
duced by the supplier, we need to go to that supplier to see what is really
going on, not leave it up to others or at any rate not allow ourselves to be
guided by convictions or hearsay. On the contrary, we need to go and see
what is really happening on the spot. This is the gemba walk.6 Exactly as the
Chief Engineer does during the development of the Concept Paper, when he
or she goes to see how the end client uses a given product.
In this phase of the project, this is the best way for filtering or optimizing
the concepts that are generated. In addition to direct contact with colleagues,
suppliers, and clients, it is clear that we should rely on common standards,
guidelines, and checklists that are used in a disciplined way by all engineers.
These documents represent everything that other working groups before us
have learned and have made available in a structured and utilizable form,
thereby supporting the process of convergence toward optimum solutions
during the study phase. This helps the teams to use data and objective facts to
make better decisions rather than being guided by arbitrary opinions.
2.3.8 Simultaneous Convergence of Different Modules

Everything we have said thus far is applicable to the different subsystems of
any new product/service, including the production system, with its different
alternatives in terms of equipment, machines, lines, and controls. The sub-
systems will converge in a series of steps toward the choice of solutions that
represent the global optimum and not the optimum of just one of them as
shown in Figure 2.10.
When we begin to embrace this way of thinking, it is fascinating to see
how quickly people get used to developing, in a quite natural way, more
than one solution to the same problem. The chosen solutions will have to
be feasible from the point of view of the group to help guarantee the best
advantage of the system. And if such a solution cannot be found during the
initial search, efforts will then have to be made to either spend more time/
effort to find more innovative solutions, or we may need to modify by loos-
ening the restraints of one or more parts of the system. If, for example, we
are trying to minimize the product cost, the work in this phase will consist
of finding the overall minimum, because it can by no means be taken for
granted that the sum of minimums of the individual parts corresponds to
Figure 2.10 The converged model of product development for complex products.
Processes ◾ 65
this result. Sometimes, the minimum piece cost of a given component does
not correspond to the minimum cost for the system if it drives higher perfor-
mance (and cost) in another part of the system. And so it becomes funda-
mental to adopt both a different way of thinking and a concrete and effective
way to quantify such effects. In all our years of experience, the minimum
total cost product is rarely achieved, precisely as a result of cultural barriers,
distortions in measurement methods, and poorly developed mechanisms for
the financial incentivization of the various groups within a company.
In the example of Figure 2.11, you can see how each MDT has explored
different feasible solutions from their own point of view, occupying their
“set” of alternatives in the subsets of the Venn diagram. When the different
sets of solutions are compared, it turns out that among the many feasible
solutions, the optimum ones occupy a limited part of the overlap between
the subsets. It is reasonable, then, to eliminate solutions lying outside this
area and to focus time on the analysis and in-depth study of those that
remain in the overlapping design space.
In one example of a systems supplier to automotive, they did in fact bench-
mark each individual subsystem on cost against the best in the world. They
found the lowest cost solutions for each part and created a “Frankenstein”
model of the best solution for each part and based their target cost on that—
a 40% cost reduction. They realized they could not use those parts as they
would not work together as a system. But they set a 30% cost reduction target
and through systematic investigation of alternative solutions converging to one
they achieved the 30% reduction (Liker and Franz, 2012, chapter).7
Figure 2.11 Example of evaluation of different alternatives: the best solution is one
that meets at the same time different feasible areas.
2.3.9 The Case of the Prius

The original Prius hybrid, the first mass industrial case of hybrid car tech-
nology, was, for Toyota, one of the projects with the greatest time pres-
sure, because the goal was to enter the market within fourteen months in
order to successfully compete with Honda, which, despite showing signs of
weakness, was already on the market with the Insight. So did they forego
thinking before acting? Did they skip the Concept Paper and the rigorous
application of SBCE? On the contrary. They demonstrated that the more
time pressure there is, and the more risk there is of making mistakes, as in
this case with an innovative technology, the more the approach bears fruit,
making it one of the fastest cases of the introduction onto the automotive
market of a completely new technology.8 And for them, it must have been
particularly difficult to do without all the learnings typically derived from
previous experiences, such as trade-off curves, guidelines, and checklists, in
that they had never produced hybrid batteries or engines. The approach in
the case of the design of the hybrid engine was the following:
◾ Consideration of eighty different types of hybrid engines in the first

exploration of concepts
◾ Reduction to ten in the second phase of selection
◾ Further study of the ten solutions in order to choose the best four
◾ Computerized simulations and in-depth tests to choose the best of the
four solutions
One of our clients, hearing me talking about this case, said one day that
it would be culturally impossible for us to get people to think about and
discuss eighty alternative solutions with so much time pressure. Indeed, if
anyone were to carelessly propose such an absurdity they would be consid-
ered out of their mind.
Are we really in a hurry? Let’s slow down then. Are we afraid of releas-
ing a poor product onto the market? Let’s find as many solutions as come
to mind and compare them. Let’s stop to think, rather than to redo and
improve something umpteen times along the way.
Eighty different types of hybrid engine are considered, reduced to ten
through a system of evaluation made as objective as possible in order to nar-
row down the solutions to a more manageable, but still high number. There is
incredible pressure, but no justification for dangerous shortcuts and no reason
to opt for the traditional approach. The higher the pressure, the more Toyota
Processes ◾ 67
took pains to consider various solutions, precisely because they wanted to get
to the end on time with the winning solution. Then they moved forward to
the computerized simulation phase with four different solutions. It was only
after this that they chose the final solution, bringing it out onto the market
within the given timeframe.
2.3.10 Group Brainstorming? No Thanks

How should we begin to develop concepts using this approach? How many
solutions should be generated? How many times should they be narrowed
down?
There is no general rule applicable to all cases and circumstances
because each time it is necessary to take into account the available time,
the possible, feasible technologies to choose from, the degree of innova-
tion needed, the size of the teams, and so on. But one thing can be said
for certain: the first step in the Set-Based methodology is to get the vari-
ous groups to develop as many solutions as possible quite independently,
which is in contrast to what happens in traditional group brainstorming ses-
sions. The idea is to give people the greatest breadth of individual creativity
at the most appropriate time. When people or subgroups meet after having
developed possible solutions independently, the comparison and evalua-
tion of ideas always produce more new ideas thereby enlarging the creative
sphere. “We learn from all the set,” the SBCE experts say about these types
of creative work sessions.
Each subgroup is free to develop the concepts of different solutions
within the parameters of action of their own area of competence, repre-
sented by assigned quantitative targets and by the set of restraints and
interfaces with other subgroups. For a car headlight, for instance, there will
be objectives such as luminosity, cost, light characteristics, size, and interface
with the fender, hood, and bumper. Within these parameters, the team will
be free to give full rein to their creativity and then compare notes with their
colleagues on the module team.
2.3.11 What Happens if the Solutions Are Incompatible

with Each Other?
After exploring the concepts of each subgroup, the next step is to compare
the various sets of alternatives and to define those solutions that work well
for everyone. So, if subgroup A has found five solutions and subgroup B has
found four, it is necessary to understand which of the respective solutions

respect the constraints of both while meeting the system-level goals. Lucky
scenario: among the solutions found there are already some that work well
for both. Consider two possibilities. Less fortunate scenario: the two sets of
solutions are far apart and there are no optimum solutions between both
subgroups. What do we do now? Crisis! It might be big or small, but this is
the right moment for it to happen. Better now rather than shortly before the
finished product is due to be delivered to manufacturing or just before it is
to be launched into the market. In this situation, one of the two subgroups
may have to reconsider their constraints, loosening them and/or one of the
groups will have to extend their set of solutions by doing more innovative
research to find a point of overlap.
One example might be the attempt to find a point of contact between
the solutions proposed by the styling center and those developed by manu-
facturing (Figure 2.12). Manufacturing have come up with a list of pos-
sible solutions they can live with and that can achieve the objectives of the
Concept Paper. Likewise, the styling center has produced various bodywork
designs.
Again, lucky scenario: there are at least two bodywork designs that over-
lap with the producibility criteria of manufacturing, and which can be made
with equipment judged to be possible by the manufacturing team.
Less fortunate scenario: none of the bodywork designs created by the
styling center can be produced with any of the solutions proposed by
manufacturing, and so we have two sets of solutions that are completely
detached and which do not overlap anywhere. In cases like this, the risks of
the project emerge immediately, and the corrective measures are managed
during the project in the early phase while the design is most fluid, when
Figure 2.12 Example of searching for an optimal solution under exploration of

concepts.
Processes ◾ 69
other solutions or compromises can be found without great upheavals to

the entire product.
2.3.12 Excessive Harmony Does Not Yield Good Products

It is not true that better products are obtained with harmony and agree-
ment. We need to know how to arrive at constructive conflict in order
to have state-of-the-art products. The truth of the matter is that there are
moments in which we must spark a crisis if we want to integrate the differ-
ent points of view, but some moments are more opportune than others. For
example: if we have to choose between a moment when manufacturing has
already defined and built almost all its equipment two months prior to the
start of production, and a moment when the designs of the product and of
the equipment needed to build it are still on paper or in people’s heads,
which would you choose? In other words, it is a question of managing to
focus the attention of the subgroups on solutions that, all things considered,
do not seem to be all that urgent, because the potential crisis we are accus-
tomed to is still a long way away. But it is precisely in the early phases and
thanks to this different spirit of Set-Based design that it is possible to avoid
the classic sub-optimum iterations that are all too familiar to us later in a
project.
In Lean Innovation, we actually “love” sparking crises in this phase,
because we want people to face up to the risks of the project as soon as
we discover them and then using the right analytical tools and techniques
that are available for resolving the situation at a reasonably low cost.
What will happen in this situation? Coming back to our prior example,
the styling center will take the opportunity to modify one of its body-
work designs to permit easier assembly, or manufacturing will make
some alterations to one or more pieces of equipment to adapt one of the
styling’s design. The designs thus gradually converge toward the global
optimum rather than favoring specific optimums that do not yield the
best solution.
2.3.13 From a Good Product to an Excellent One

When selecting the concepts that have been explored, the tendency is to
choose what is regarded as the best solution, but it is worth giving some
consideration to the word “best”: compared to what? What works well for a
specific need might conflict with a different one. Without this broad vision
of the whole field of the system’s functions, we might end up making some
really huge blunders. To avoid this, it is worth reflecting on how the key
characteristics and the performance of the various solutions behave relative
to one another. Technically, the curves representing the variation of a perfor-
mance with respect to a variable are called trade-off curves. If we have the
data, it is worth drawing them to help make an objective analysis, as in the
example of Figure 2.13.
In this case, we can discern how it is possible to conduct a technical
and/or financial evaluation with a quantification of the optimum solution in
the whole field of functioning, as opposed to the identification of a “merely
good and acceptable” solution.
2.3.14 Two Small Secrets

2.3.14.1 First Secret
In many projects, we see a quest to achieve 100% performance in all
the subsystems. But there are times when the attempt to obtain 100% in
everything does not lead to success. When we have an overly innova-
tive solution, it is a good idea to protect ourselves with a “backup” solu-
tion that may only be 80% okay, which, in the event of difficulties, can
protect us from the failure of the entire system. This is the reason why,
Figure 2.13 Example of a trade-off curve.

Processes ◾ 71
when developing new products, Lean companies have the good habit of
coming up with at least one backup solution for those parts of the system
where they can see risks. Would you prefer to have a product consisting
of parts theoretically delivering 100% performance but where there is the
risk of a product recall due to a quality problem, or which does not even
get through the testing and validation phases, or a product that contains
a few parts with 80% performance but which are reliable and guarantee a
problem-free market launch?
This is the small secret that enables many Lean companies to be sure of
obtaining, within the established time frame, the solution with the greatest
final quality, by carrying forward backup solutions right through to the end
of the development phase, ready to enter the field of play when things get
too risky. In fact, this is often the secret to ensuring the successful on-time
completion of the project with minimal risk.
2.3.14.2 Second Secret

When we advance the development of various parts at the same time, it is
likely that some will converge sooner, managing to define the best concep-
tual solution to carry forward into the next phase of the project. What can
happen in this case is that the slower subgroup comes up with solutions
that “do not fit” well with the already advanced ones, forcing the entire
system to embark on fresh iterations and stops and starts during the proj-
ect. Another thing that can happen is that one group prematurely accepts
a solution that offers it lower costs but do not offer the real minimum total
product cost. How many times does it happen that we carry forward solu-
tions, moving ahead more rapidly than other colleagues, only then to be
brought to an abrupt halt or required to revise what has been done? To
avoid this, the Chief Engineer or Project Manager must be capable of slow-
ing down one or more groups to ensure both synchronization of tasks and
the best system integration in the least amount of overall time. This will
help to have the smallest possible number of modifications downstream for
the team.
In other cases, when we can decide early on a part of the product, it
allows us to release that part early for tooling. This is called “staggered
release.” For example, Toyota will release some steel body parts early for the
development of molds rather than send a huge batch to body development
all at one time. This smooths out the workflow for the downstream opera-
tions reducing overall lead time and often improving quality.
2.3.15 When the Supplier Teaches Something

to the Client: The Denso Case
Overly precise specifications at the beginning of a project delivered to a
supplier or a designer may signal that concepts have been explored only
roughly or that a Concept Paper has been poorly conceived. Why? Because
at the beginning of a project, it is unlikely that all the details of a design
solution will be known. Certain things might be known—the price and cost
targets, the general characteristics of the product, or service to be devel-
oped—but it is practically impossible to ask a supplier for an object or
service with specifications and requests that have been firmed up too far in
advance. This, on the other hand, is what many purchasing departments ask
or hope for, in order to wrap up negotiations purely on the financial and
business level. But it is hardly ever considered that design solutions evolve
along the way and that contractual dealings cannot be set up prematurely.
On the contrary, it is not yet known how the detailed product will turn out.
This approach then gives rise to the never-ending churn of modifications,
renegotiations, unexpected price hikes, and a colossal waste of company
time and resources. Such situations arise so often that it is quite legitimate to
ask: How can all this happen?
Let’s look at a case with a company called Denso. Denso is a supplier of
car parts, including radiators. One of its customers, a well-known car manu-
facturer, had asked them to develop a new radiator, giving them product spec-
ifications and requesting the definitive quote. However, certain aspects of the
performance specifications in the Request for Quotation seemed contradictory
even after trying to clarify them with the customer. What’s more, the specs
came with a mass of detailed information and requirements that seemed to be
at odds with the real state of advancement of the project. For example, there
was little correlation between the functional characteristics requested and
the cost goal imposed. In the face of these doubts, the technicians at Denso,
already accustomed to working with the Set-Based Concurrent Engineering
approach, decided quite independently to develop some mock-up prototypes
with different possible solutions and variants to submit to the client, even
though these had not been requested. One of the variants coincided closely
with the requested specifications. But as they considered other solutions, some
of which would actually be less costly for the client, the decision to explore
different concepts seemed the most sensible path to take in order to under-
stand what the client really wanted and to make the client clearly see the
trade-offs that needed to be made. Three sets of solutions were proposed: the
Processes ◾ 73
most expensive one, high performing; a solution geared more toward middle
performance; and one set mostly focused on cost. Each set of solutions also
had three to four variants. Obviously, the prototypes were rather rudimentary
means with a view to the speed of execution, but were sufficient to help the
client to achieve a rapid understanding. By “seeing” the set of possibilities, the
client was better able to articulate their true needs and collaboratively work
through the trade-off decisions to be made. Thus, Denso was carrying out at
the same time an SBCE-style process, involving the client in the phase of con-
vergence to try to avoid iterations, delays, and modifications that would have
been normal with a traditional approach.
The SBCE approach can, therefore, be a tool in the hands of the client, to
guarantee optimum solutions in a limited period of time, or an excellent tool
in the hands of a highly evolved supplier to get the client to modify vaguely
defined specifications on the basis of objective facts and parameters. This
holds true above all when the specifications and other documents from the
client are characterized by excessive paper-pushing and bureaucratic zeal
that aims for a single solution that frequently squashes innovative opportu-
nities. This is an example where facts, numbers, and concrete things were
placed on the table, providing the elements for a more effective choice. Not
a battle of words and negotiating gamesmanship, but a reasoned and mature
presentation of different technical alternatives made available in a structured
(and creative) way to find the best overall solution that was a win-win for
both the client and the supplier.
2.3.16 Problem-Solving Resolves Everything…

But How Much Does It Cost?
Eliminating problems before they arise is one of the guiding principles
for the development of a new product or service in a Lean company. For
this reason, a hunt starts during the Concept Paper and Kentou phases, for
all the weak signs that might arrive from various areas of a company in a
structured way. That is why efforts are made to uproot the causes of pos-
sible future problems by going to see what is going on where a problem is
first detected—in the factory, at a supplier, retail outlet or the client’s site. In
every case, there is always a clear mission, namely, to resolve the problem
but just as importantly is to capture all the learnings to make them available
to colleagues and partners.
Many companies fall in love with (retrospective) problem-solving methods
and tools, for instance, the whole six sigma framework,9 forgetting, however,
the enormous potential that resides in the healthy capacity for predictive
rather than retrospective problem-solving. Sometimes we attend task-force
working group sessions and observe people with great experience working in
firefighting mode only once the problem has already exploded. Paradoxically,
we do not always see this same experience and energy working to prevent
the problems. Wastes such as product costs are too high, transport problems,
fluctuating performance, customer complaints, unexpected losses in market
share, and so on. In the majority of cases, these problems were predictable.
During our Lean workshops, we sometimes devote whole days to understand-
ing, together with the project team, how we could have prevented one or
more recent headaches encountered on current projects. Almost always there
would have been a way, and we can assure you that calculating how much
time and money this lack of prior attention costs the company provides con-
siderable food for thought on the virtues of firefighting. It is more convincing
than a whole lot of philosophical talk debating the subject.
There are three basic rules for predictive problem-solving in the develop-
ment phases:
1. Immediately: every time any kind of risk is feared, tackle it straight

away.
2. Go to the source of the problem: the potential problem must be dealt
with by removing the possible causes at the roots, and not just treating
the symptoms. This can only be done by truly grasping the situation
firsthand.
3. Focus on learning: having dealt with the root of the problem, capture
and pass on what you have learned, taking pains to inform others so
that the same problem will not recur in the future. Formal documenta-
tion in checklists or know-how databases is even more powerful.
If the focus is more on making sure that problems do not arise rather
than solving problems that already have happened, this attitude will become
a new way of thinking that supports a proactive problem-solving culture. In
fact, in this type of culture, every time there is the whiff of a possible prob-
lem that might crop up, it is obvious to everyone that it is pointless to put
it off and that getting a grip on it before it explodes in our faces is the most
effective path for the whole company. Such an approach inevitably requires
a “go and see, and get your hands dirty” attitude, especially in the product
development phases. This is the very first concept Luciano learned in the
field with his Japanese sensei, Masaaki Yutani. Being a good former Toyota
Processes ◾ 75
manager, and perhaps because he did not fully understand our Italianized
English, he always tended to go to the production line to find evidence of
what he was being told. We might be talking, for instance, about standards
of cleanliness in the department, with everyone swearing that it was impos-
sible to do better, and we would see him get face down onto the ground,
wriggle right in under the machines (getting up visibly dirty), demonstrat-
ing to us that he was totally unafraid of going immediately to the heart of
the problem. The process he taught us, by example, is the fundamental
importance of focusing on learning. When, as a recent graduate, Luciano
compared him in his mind with many other managers he was getting to
know, he noticed a big difference. In the space of a few minutes, and with
a minimum of words, he taught Luciano much more than a master’s course
on advanced problem-solving techniques. He would state bluntly, “Never
allow weak signals to crop up again as future problems,” and he would try
to make Luciano understand how important it was to have the same wide-
spread will at all levels of the company.
Too often, we are accustomed to action, to solving problems and mov-
ing on. We are unconcerned about other colleagues who may face the same
obstacle tomorrow, about how we can stop them encountering it, about how
we can make available to them the solution we have found today. And more
often than not, guess who ends up in the shoes of that colleague? We do.
2.3.17 When Simple Steps Yield Solutions That

Avoid Serious Consequences
Sometimes it is hard to avoid certain technical problems, even serious ones,
because “time is not lost” in the design phase on examining experiences
prior to the project in question, or because not enough time is invested in
evaluating the feasibility of a solution together with those people who have
the practical knowledge to quickly pinpoint technical risks and opportuni-
ties. For example, we might see, in relation to pieces produced through
casting and heat-deformation processes, the recurrence of problems already
experienced in the past— such as deformations, cracks, ruptures due to
over-rapid cooling, non-optimum molds, or logistics issues. This happens
every time we skip simple, sometimes obvious steps, like going to see what
is really going on in the prototype department, or seeking the opinion of
those directly involved in the production of those pieces. We do not nec-
essarily need to have a structured Knowledge Management system, we
just need to be guided by a healthy focus on continual learning. In a Lean
Figure 2.14 Example of technical problem solved in the bud.

approach, efforts are made by the project team to ensure these simple steps
are taken frequently, as in the example of Figure 2.14.
Above all, you will note how the initial solutions have been presented
in this case: in the form of an old-fashioned pencil sketch, and not on
a finished CAD model. In Figure 2.14 you can see a comparison of two
solutions, number 3 on the left and number 4 on the right. The sketch of
solution 3 had been immediately “blocked” by the person with responsi-
bility for production, due to producibility problems regarding a part and
its transportation that would lead to waste in his facility. On the basis of
experience and standards, the production engineer identified various pos-
sible problems in this design condition, including mold stability and the
movement of materials. The designers therefore made modifications lead-
ing to the next solution, number 4, maintaining the functionality of the
item but eliminating the producibility risk at the outset, while it was still
on paper, without waiting for it to explode once production was under
way. Early identification of the problem gave engineers more freedom for
coming up with possible solutions, because the design was still flexible.
Redesigning the solution in this phase of development was not expensive,
the only cost being the time to use one’s head, a little discipline, and com-
mitment in tackling a problem so far in advance and not being in a state
of emergency.
The importance of introducing the phase known as Kentou, the prelimi-
nary study of alternative concepts, proves not only to be strategic to the
pursuit of innovative solutions with higher end-customer value, but also
indispensable for channeling our creativity to avoiding heaps of internal
costs arising as a result of having designed solutions that initially worked
well for someone, but were not optimum from the company’s point of view.
Processes ◾ 77
2.3.18 It Is Advisable to Make Modifications Early On

Lean companies must live with modifications. Indeed, there may be, on
some projects, more modifications in the design process than with tradi-
tional companies. However, the advantage is that they make them earlier. As
has been already mentioned, they actively go looking for them in concept
and development where the disruptions are few and the costs of modifica-
tions are typically lower. Look at Figure 2.15.
A good way of gauging the “leanness” of a company is to monitor the
period in which modifications are made during projects and during the life
of their products. The more modifications are made at the upstream end,
the “leaner” the company is in the development phases and the less it will
clearly spend on modifications just prior to production. Among other things,
modifications made upstream can be more radical and less of a “patch”
solution, as happens when modifications are made close to or after produc-
tion has commenced. The more effort is made at prevention at the begin-
ning, the less rework has to be done just before production, when the cost
of the quick fix is typically more expensive to implement. As an American
colleague said: “You pay much more for a late change and you usually get a
less robust solution!”
Figure 2.15 Different models of approach to change. (Source: Drogosz John, Lean
Product & Process Development Handbook, University of Michigan, 2007.)
2.3.19 When a Limited Budget Makes No Provision

for Additional Expenses
We have often had direct experience of conflicts arising from not being able
to spend a few tens of thousands of dollars in the development phase, due
to budgetary problems, and then having to spend hundreds of thousands
of dollars two or three years down the line to resolve the problem once it
exploded when production was under way and the product had reached the
end customer. In retrospect, the budget argument simply does not hold up.
The money has to be spent at the right time, otherwise the consequences can
be significant in terms of lost profit margins or even worse loss of customers.
The paradox is that, with the emergency, the focus now shifts principally
onto the customer. A couple of years earlier, the focus was short sightedly
on the budget, rather than on the risk to the customer. Often, it is the men-
tal attitude of managers and technicians that makes the difference. Policies
and procedures have little to do with it in these cases even though they are
frequently the scapegoats for the aforementioned behavior.
Usually, the fundamental cause of this rather narrow-minded attitude lies,
once again, in considering the short-term financial constraints, rather than
attending to the long-term value of the company. Very frequently those same
managers who favored short-time choices will, after two or three years,
have changed job role or company, leaving the old problem unsolved in the
hands of someone else.
The development of a product is strategic, not tactical. Companies that
are leaders in innovation are fully aware of this, and really do consider
customer value from the very earliest phases of development. They do not
waste time eaking their way through each quarter counting money, but
work energetically to “make money” in the long term, demonstrating that the
value of a company is a consequence of the sum of all the decisions that are
taken to bring value to the customer.
2.4 Value Stream Mapping to Understand the Real Current

State and Creatively Envision a Desired Future State
Discovery consists of seeing what everybody has seen and think-
ing what nobody has thought.
Albert Szent Gyorgyi
Processes ◾ 79
In companies, whether big or small, we often act without being aware of the
patterns we repeat every day—actions performed repetitively either as indi-
viduals or as a group, both when these bring good results and when they
bring bad results. In managerial jargon, such patterns are called processes.
And here arises one of the most common errors, which I see repeated in
companies of all sizes. What is a process?
Almost all companies, when they decide to represent themselves in terms
of processes, choose the short and easy route, with purely formal proce-
dures and heaps of standard operating procedures describing the various
company processes: production, administration, design, logistics, and so on.
Above all, the objective is not to use the charts and descriptions of company
processes as tools for continuous improvement, but to arm themselves with
reassuring procedures to give a semblance that they have the process under
control.
To what extent do you think these thousands of written procedures are
a faithful representation of real company processes? Of what really goes on?
Of the real habits that people have acquired over the years? Often, they are
only so in theory, and are only produced with a view to getting through
a quality certification every few years. Who has written these processes
and procedures? Were they written by the people who perform them or by
someone else on their behalf? And above all, why were they written? Many
times, they are summarized descriptions of process flows, as you can see
in Figure 2.16, where, in the first line, there is an example of activities that
describe a possible process. Linear, neat, and tidy, offering a good represen-
tation of what we think, or hope, is the reality. Unfortunately, though, in the
majority of cases the representation is far from accurate.
Figure 2.16 Comparison between different interpretations of a process.

What happens in practice is much more difficult to represent than what is

shown in company procedures, which is why it is much simpler to produce
a thick file, bind it all together nicely, and get ready to pass the certification
test. Representing the “what it really is” in all its complexity is a much more
difficult task. Above all, it requires a willingness to see the deep-down real-
ity and the waste associated with the current processes. Various examples
spring to mind, some of which we have already discussed in previous sec-
tions, where “everyone knew, but nobody said anything,” thereby burying
problems and real habits until the arrival of the next crisis requiring urgent
resolution, at all costs and in any way possible.
How can we learn to represent reality faithfully, with the aim of using
this representation as the basis for making improvements? In order to
move from a genuinely complicated situation, but faithfully represented,
to an improved and potentially achievable situation, as in the second of
Figure 2.16, we need, with great humility and honesty, to sit down and
represent the real process. It is hard work, but necessary. By doing it, we
can turn this process mapping into an activity. This almost always involves
a cross-functional team with a skilled facilitator to encourage everyone
to take ownership of their processes and attack the everyday wastes that
stand in their way of delivering innovative products to the marketplace
faster, cheaper, and with higher quality. This must be followed up in regu-
lar meetings, at least weekly, to discuss the actual state of the project and
deviations from the plan. They can then convince themselves of what is
truly achievable for their process once waste is removed as is shown in
line three of Figure 2.16. Above all, we must realize that in every company
big or small, information, material, and communication flows are complex,
and may pass from one person to another and one department to another
several times, as in Figure 2.17.
It is necessary to accept the fact that process mapping involves several
people, who are often performing activities in different places and at differ-
ent times. At Lenovys, we begin almost all our projects in companies with
a representation of their reality, which starts from the simplest element, a
basic block of activities, and the cross-functional team went over this in
detail developing an increasingly complex representation of everything that
is performed in the activity flow under examination. In the early 1990s,
Daniel Jones and Jim Womack gave this technique a name, Value Stream
Mapping, adapting the original Toyota technique called “material and infor-
mation flow diagrams.” Originally, this technique was used to analyze pro-
duction processes in order to identify all those activities that added value,
Processes ◾ 81
Figure 2.17 Example of real flows to be mapped during product development.

(Source: Drogosz John, Lean Product & Process Development Handbook, University
of Michigan, 2007.)
separating them from those that did not so that the identified wastes could
be eliminated.
Through a highly hands-on activity carried out in the workplace, “gemba”
style, all the various phases of processing, handling, transport, control, pack-
ing, shipping, construction, assembly, and so on, are mapped. The ulti-
mate aim is to reduce the time all this takes, to increase productivity with
the same resources, and to limit gaps through a systematic hunt for waste.
Consider the example in Figure 2.18.
When attempts are made to apply this technique in the office and above
all to the design, creative and intellectual activities workflow, a considerable
number of problems arise. Compared to what has been done in manufactur-
ing, these techniques are relatively little used to represent real process flows
in the world of product and service development. Why?
In manufacturing, most of the flows are linear, and mapping what hap-
pens on a production line is much easier for various reasons. First of all, due
to a question of time. The time it takes an item to go down a production
line might vary from a few minutes or a few hours through to a maximum
of a few days, a few weeks for more complex cases, if we consider partially
offshored manufacturing and transportation by ship. It is never like what
happens in the development of a new product, where we may be talk-
ing of up to a few years. In such cases, it is difficult, even mentally, to map
and trace the path that is taken. Reconstructing various months or years of
activity is hard work, but necessary, if we want to gain a picture of the real
Figure 2.18 Example of Value Stream Mapping in production. (Source: Drogosz John, Lean Product & Process Development
Handbook, University of Michigan, 2007.)
Processes ◾ 83
situation, however complex that may be. This is the best way to get a pro-
found understanding of why often unseen or underestimated problems are
occurring, because cause and effects relationships cannot be seen immedi-
ately but only after months or even years. Another typical problem associ-
ated with the development of a new product or service is that the flows are
never linear, and there may be many locations involved depending on the
process being analyzed. Also, while in manufacturing you can go and see,
in the true spirit of Japanese “Genchi Gembutsu,” and gauge and measure
scrap, inventory, and the cycle times of the various activities, in intellectual
activities like those of design, it is hard to find objective data. For example,
when I ask designers what they do exactly, how long their typical activities
take, and when a specific activity can be considered complete and no longer
in their hands, the initial response is invariably very ambiguous. It is hard
for them to say what they do exactly, both because they are not accustomed
to “mapping,” describing, and measuring, and also because intellectual
activities tend to be entangled with others, in vast oceans of multitasking
and hard-to-articulate interactions that can vary from one project to another.
The initial struggle is to have the team try to “see” the activities they do,
through the experience of a “reality mirror,” represented by representation,
on a big wall, of their process, or Value Stream Map. This early frustration,
this looking in the mirror through frequent leaps into the past and into real
everyday experience, gives way to enthusiasm when people see themselves
represented not just directly, but also together with the various interactions
with their working groups and their colleagues in other departments. All
this takes place in a clear, simple, and direct way, so as to encourage a full
awareness of what goes on. The problems become more visible and the
team sees that it’s not my problem or your problem but rather our problem
and we need to work together to fix it.
2.4.1 Value Stream Mapping in Practice

Here, we look a bit more closely at Value Stream Mapping, which will hope-
fully be useful for anyone who wants to try out this technique for mapping
any kind of administrative activity. Every activity that an individual or group
performs can be represented by a block of basic activities. Simply arm your-
self with bits of card or sticky notes and start jotting down the activities per-
formed by everyone. Although software packages are available to support
us in this task, we advise to use simple means such as sticky notes, marker
pens, and free walls. There are various reasons for this.
1. Speed and simplicity of execution, modification, and representation.

2. Facilitation of socialization and interaction.
3. With a computer, the focus tends to be on the single person working
with the computer, who is controlling the activity.
4. With computer tools, there is a tendency to think more about the tool
and the form rather than the content and the real aim of the exercise.
5. With a computer, even if images are projected on a large wall, there is
no possibility to interact quickly and physically, with simple, concrete
activities like moving a sticky, adding another one, or making a change.
With a computer, you cannot stand around talking and reflecting in
front of the wall on which we have built up our Value Stream Map,
which becomes a true mirror of reality, constructed together with all the
participants.
6. With the computer, there is always the risk of Stop and Go waste while
everyone is waiting for the person to type in all the information and
the team loses momentum in effectively following the process. In fact,
some people may get frustrated and mentally detach from the activity.
Only when the group concludes that the crude hand-written map is a
reasonable model of the processes the team can, after having completed
the work, transfer everything to a computer for easy distribution to a more
broad group. Note, we said reasonable model, as there is enough varia-
tion across projects that a perfect representation is not possible, nor neces-
sary. What we prefer to do, then, is to begin with the human contact and
by filling out sticky notes: name of activity, description, who does it, and
the task time. Each activity is then labeled as to whether it is value-added,
necessary waste, or pure waste. Sometimes, it is not immediately clear
how to distinguish between waste and added value, because the tendency
is always to justify what one does a priori. Modifications, repetitions,
redundancy, and waiting for things are some examples. To categorize it
correctly, we must adopt the end customer’s point of view. As we have
already seen in other parts of the book, if the customer sees it as value
added that they are willing to pay for, that activity is value-added. Other
activities may be necessary, but non-value added. For instance, a verifica-
tion of compliance with existing government requirements are activities
that do not actually bring any added value to our end customer, but they
are necessary for legal purposes. Still other activities are pure waste: for
example, when we repeat an action that has already been done, or repeat
a drawing, a document, specification, or modification. I use a nice bright
Processes ◾ 85
red marker to distinguish these from the green (added value) and yellow
(necessary waste).
Another strand of information that needs to be traced is the net dura-
tion of the individual activities under examination, what John Drogosz calls
“task time,” which is then compared with gross time or “time in system”: in
other words, the real duration of the activity in the system I am mapping.
For example, I may have done a drawing in two to three hours, but in real-
ity that drawing may have spent two days on my desk. Seeing the reality of
the situation and the real figures, accepting the fact that you have a “time in
system” of two days compared with a “task time” of three hours, begins to
stimulate people to ask “why.” Deeply involved in the mapping activity, they
begin to identify an endless series of wastes, causes, and ideas for improve-
ment. The most important part of the mapping consists precisely of this, of
measuring activities with impartial eyes to create a common awareness. As
this spreads, barriers between people begin to crumble. When approached
with humility and pragmatism, the mapping activity naturally leads people
to open up and to try to understand the reasons underlying what is happen-
ing in their processes. For example, the commercial people become more
aware of the challenges faced by designers, who become more receptive
toward production’s concerns, and so forth. Understanding that we are all in
the same boat paves the way for collaborative efforts to identify the possible
causes of problems and make sustainable improvements.
To standardize the activity and to ensure it is a tool that can be used by
everyone, below are some standardized icons (Figure 2.19) that are similar
to traditional Value Stream Mapping in production but adapted for product
development processes.
Some frequently used icons are the triangles to represent the myriad
delays that occur in office processes. Another important set of symbols are
the arrows that makes it possible to distinguish whether an activity has been
“pushed” or “pulled.” What happens in the vast majority of cases seen thus
far is that all projects are “pushed” by someone and not “pulled.” Typically,
when initially mapping processes, they tend to be full of “push” arrows:
Project Managers who push their various requests, designers who have done
some drawings and then push them on after they have finished, and so on.
Over time, you will see the evolution of the Value Stream Map, with the
introduction of elements where activities effectively pulled by the needs of
those further on in the value chain. Another common symbol, perhaps the
one we see most often in the mapping of processes, represents the itera-
tions of individual activities. Two, three, and sometimes even a generic “n,”
Figure 2.19 Icons more used in the mapping of processes, research, and
development.
simply because people are unable to calculate the number of times an activ-
ity has been repeated. And this, we can assure you, is one of the findings
that is most eye-opening and gets participants thinking about how they can
improve their process. In one case of a company making gas-electric tur-
bines, the iterations were due to an inability to model combustion accurately
so testing was a necessary waste. Reducing lead time required reducing the
time of testing cycles, which also allowed more cycles if necessary to opti-
mize the design. This led to a multiyear project, first to dedicate a test cell to
design (previously it was shared with manufacturing) and then increasingly
eliminate waste in the test sell. Visual management of the process allowed
the team to understand incoming work, lead times, and how the product
was moving through various steps in the prototype build and test process. It
also because a hangout for combustion engineers who were able to see and
learn in real time the results of their design concepts.
2.4.2 The Steps of a Value Stream Mapping Event

Applying Value Stream Mapping to the form of a workshop has been proven
to be the most effective way to drive improvements. As a start, it is important
Processes ◾ 87
to properly scope the process(es) that will be improved. This includes defining
the boundaries of the processes to be mapped, choosing the product we will
follow through the processes, setting initial improvement goals, and identifying
the people who need to be involved in the Value Stream transformation.
Figure 2.20 shows a standardized process to conduct a Value Stream
workshop. During the workshop, the first thing to grasp is who the cus-
tomer really is. This is less obvious than it might seem, because frequently
the entire team lacks knowledge of who uses the product and what they
value from the selected process. This happens both in relation to internal
and to external customers. Often, there are different clients, and it is vital
not just to be aware of this, but also to know what each group actually
needs. Take the case of Harley-Davidson, which has quite a complicated
structure. They need to satisfy the needs of various kinds of clients: the end
customer who buys the motorcycle, the sales dealer client who sells it to the
end customer, the bike enthusiast who buys spare parts to enhance his or
her bike in latter years of ownership, and the mechanic who services the
product. For each of them, it is important to know the different needs that
they deem as value-added. Remember what was said about the Concept
Paper, when we talked about the different customer needs. If we are unable
Figure 2.20 Scheme of the improvement process. (Source: Morgan J. and Liker
J.K., The Toyota Product Development System: Integrating People, Process, and
Technology, Productivity Press, 2006.)
to clearly distinguish between added value and non-added value, from the
point of view of the customer, we will never be able to “see” waste in our
processes. It is important to be ruthless while doing this, if we really want to
understand whether what we are doing adds value for clients or not.
The question that needs to be asked every time is this: would the cus-
tomer pay for this? If the answer is ‘yes,’ it is then important to consider
that the customer will only be willing to pay once for the same product or
service, or part thereof. Stepping into the shoes of the specific customer pro-
vides a picture of everything that is waste and not added value. And what
amazes all of our clients is the ratio between the sum of added value activi-
ties and the total of the activities performed to obtain that value. The pro-
portion of added value is so tiny that it almost always represents a powerful
stimulus toward action and improvement, in order to move in the direction
of obtaining more value with less waste.
After defining the specific customer(s) and those customer’s needs, the
next step of the process mapping is to create a representation of the “current
state.” Here we will always try to add in as much detail as possible regard-
ing reconstructed activities, durations, iterations, dead time, flows between
groups, and other relevant facts for the given product we are mapping.
The goal is to have an understanding and facts about the process, so as to
be able to identify problems and wastes. We use horizontal swim lanes to
represent the activities of different functions. Across the columns at the top
there is time so we can see the flow of activities across functions over time.10
Between the mapping of the current state of processes and the future
state, we use a tool as simple as it is powerful. The Japanese call it han-
sei, which simply means “reflection.” Hansei is a key concept in Japanese
culture, and is based on the simple idea that there is always something
to learn from past events: from one’s successes, in order to obtain further
improvements, and from one’s errors, so as to avoid them in the future. This
approach is also used as a means of regular verification during the course of
a project, to capture learnings. We will discuss this in detail in Chapter 4.
When the habit of doing hansei is cultivated with the team during the
Value Stream Mapping, many issues are surfaced, wastes specifically identi-
fied, root causes are analyzed using concrete facts and finally suggestions for
improvement are made to improve the process. This naturally leads to the
next step: the creation of the future state of the processes.
In the definition of the future state, the team is prompted to draw up a
new and improved process that removes the wastes and includes the sug-
gested improvements that came from the hansei. Exploiting the lessons
Processes ◾ 89
learned from past experience, an attempt is made to establish not only the
new process but also the tools, and habits needed to make the process work.
Once the map of future processes has been charted, we clearly have
a whole set of opportunities that have been included in the future state.
Then comes the final step: definition of the implementation plan, with the
choice of priorities, the timing of improvement actions, and the assigning of
responsibilities.
For the process to work well, it is important to have a skilled facilitator.
Our role in these workshops is to facilitate the process and more importantly
stimulate the team to come up with their own solutions to address the prob-
lems that are inhibiting them from doing their work effectively so they can
have more free time to innovate. At the same time, as outsiders, our most
important job is to develop internal facilitators so we are no longer needed.
2.4.3 Why Not Start Immediately with Tried

and Tested Solutions?
When applying Lean in the innovation and product development space, there
is not a single validated recipe for everyone. Each time is a new discovery for
the teams and for us. Once, we did the same type of work with three differ-
ent business units from the same company. It was essentially the same pro-
cess but three different products, ultimately leading to three different versions
of future maps and three different implementation plans. The workshops are
focused, intense and relatively brief, lasting at the most three to five days, but
nonetheless are incisive and readily accepted by whoever is involved. This
way of working puts you in much closer contact with people, and with their
real world. There are no general or abstract solutions. Instead, it is neces-
sary to “get your hands dirty,” in an effort to understand what is really going
on, guiding a process of increasing awareness and enhancing the maturity
of the people involved. The role of the effective sensei is to be a humble
coach who leads the team in shaping a leaner operational future. Once this
step has been done together, points of view change, and the “project game”
moves to a different level of performance, because no one is imposing any-
thing, because people believe in what they are doing, and because this is
what provides the extra impetus for the subsequent implementation of what
has been defined by future state. This is in contrast to what happens in the
traditional consulting approach, where the tendency is to impose universal,
or benchmarking, models and schemes, without showing any great respect
for the human and technical context in which one is working.
Not infrequently, clients ask us to come to them with ready-prepared

solutions to apply, in order to avoid the effort of the initial mapping. For
traditional consultants, the pre-ordained solution is perhaps the ideal modus
operandi. Traditional consulting activities include preliminary interviews,
almost always individual, elaboration of the initial state, comparison with
reference models, and a virtually unilateral proposed solution for the revi-
sion of processes. Take it or leave it. And often, attracted by the apparent
financial benefits that are promised, the proposed solution is accepted, after
which begins the difficult task of trying to put it into practice. The social
aspect of the problem is ignored altogether. In a genuine Lean spirit adapted
to the context, using a proven methodology, the processes, solutions, and
project plans are devised by the people who then have to implement it. It is
no longer something that just concerns the Project Manager or the consul-
tant, but the whole team, who are instead lead by the Project Manager and
coached by sensei.
As John Shook says, “it’s not about the map.” The real added value of
this activity is not the map, but the very fact of having activated a process of
awareness-raising and self-improvement among the people in the company.
In cross-functional workshops, agreement begins to emerge about what
really happens and as the future state is developed commitments are made
by each function that will be necessary to make the new process work. For
example, in the same gas-turbine engine case, the purchasing department
agreed to violate normal policies and order parts as their design was com-
plete instead of waiting for a complete design of all parts in a final engineer-
ing database. The casting supplier who was in the room agreed to prioritize
these small batches as long as engineering did all they could do to commit
to these designs and not change their mind multiple times. These represen-
tatives then met in weekly meetings to implement and remind each other of
their agreements. The result was the fastest lead time for a similar product in
the customer’s history—on-time, with quality, and at budget.
2.5 How to Get the Intellectual Juices Flowing

without Obstacles or Interruption
Those who make the worst use of their time are the first to com-
plain of its brevity.
Jean De La Bruyère
Processes ◾ 91
After having defined customer value and given maximum importance to

the initial phases of the project set-up, it is important to see how we can
stimulate the creativity and innovation of our people while speeding up the
phases of project execution.
Often, one of the obstacles we come across in improvement activities
and in the running of Lean Innovation projects in companies is voiced by
many people as: “I like it, and I agree with it, but I haven’t got time.” At first,
everyone appears too busy running around trying to deal with urgent mat-
ters, which sometimes turn into emergencies, and they do not have time to
deal with “less urgent” activities that potentially could reduce the burden of
urgent ones in the future. Two key elements need to be considered here.
1. Effectiveness: habits acquired in the choice of the “things to do.”

2. Efficiency: habits acquired in the choice of “how to do things.”
As we deeply explain in the Lean Lifestyle® framework, it has been

amply demonstrated that the majority of us are no longer accustomed to
really choosing what we do. Instead, we live in a continual “reactive state.”
This state makes us respond constantly to events, stimuli, and input from
outside—television, newspapers, family, colleagues, bosses, friends, and so
on—rather than setting out to make conscious choices regarding what is
really important for us and for our company in the precise moment in which
we are acting. From a neurological point of view, the habit of behaving in a
reactive way is plausibly explained by the slow release of dopamine every
time we react to urgent input. Dopamine, in fact, is one of the principal
neurotransmitters involved in the mechanism of pleasure and reward in our
brain. It plays an important role in all those experiences that offer gratifica-
tion to a subject, both physiological and pathological, in particular in addic-
tions to substances or behaviors. We are effectively “addicted” to our habits
of living in a reactive state.
2.5.1 The Myth of Multitasking

Scientific research demonstrates that incoming email, phone calls, and other
information can modify the way we think and behave. It alerts us to the
fact that our attention capacity is undermined by the abundance of informa-
tion. The reference here is to the primitive impulse to respond to immediate
opportunities and to threats. The stimulus provokes excitement—a dopa-
mine rush. In the absence of stimulation, people get bored. While lots of
people think that multitasking makes people more effective and productive,
scientific research shows that the opposite is true.11 People who do lots of
activities in parallel, male or female, experience difficulties in concentration,
and are unable to ignore irrelevant information, ultimately suffering from a
greater degree of stress. In addition, research is also discovering that, once
the parallel activities are finished, a “fragmented” mode of thought and dif-
ficulties in concentration continue to persist. More generally, cell phones
and computers have transformed our lives. They enable people to work
anywhere, away from the office. They shorten distances and manage innu-
merable small everyday tasks, freeing up time for more interesting things.
In one way or another, media consumption has literally exploded. In 2008,
people were absorbing three times more information every day than in
1960. Clearly, some multitasking is needed in the office but when too many
tasks are being juggled at one time and they begin affecting the quality and
output of the tasks, we know we have crossed the line from efficiency to
ineffectiveness. This is particularly true when dealing with intellectual activi-
ties, when innovating new products and clarity of thought is must.
In the specific context being dealt with here, what we do with ourselves
and our customers is to try to identify and develop new habits that replace
previous ones. The aim being to literally recover lost energy: for example,
learning to carve out invaluable time to “reconnect,” on a weekly and daily
basis, to focus on chosen prioritized activities, in a genuine process of con-
scious self-regulation. The key word to developing a new routine is “repeti-
tion.” We must over and over practice the new behavior until it overwrites
in our brain the neurological patterns of behavior we are trying to modify.
It is, in fact, practically impossible to remain connected with oneself if this
process is lacking in the world we live in, so full of input, information, and
stimuli. The process must be entirely personal, but it cannot bear fruit unless
it becomes a structured habit.
2.5.2 Queuing Theory and Intellectual Efficiency

Few people devote attention to the concepts of leveling and sequencing
with respect to their activities or those of their project group, because of
the widespread conviction that the important thing is to “get things done.”
In actuality, what we achieve—our output—depends a great deal on how
we set up those activities. We would like to draw on queuing theory to
illustrate a very simple, but fundamental, concept in determining the time
it takes to respond and close activities. The duration of an activity, its cycle
Processes ◾ 93
time within any given system is not directly proportionate to the saturation
of the system itself, but is correlated exponentially to the degree of use of
the system’s resources. What does this mean in practice? If we have a group
of people utilized at 90%, the cycle time to perform any given activity will
be greater than a case in which the same group of people are only 50%
saturated (Figure 2.21). Every extra activity that comes in from a certain
point onward, in the vicinity of 80%, not only slows down the group’s per-
formance, but makes it hard to predict when it will be done as well.12 For
example, an activity with an average duration of two days, when the group
is utilized at 80% or less, may take from four to eight days if that group is
excessively loaded.
Therefore, not only will it take much longer, but we will not know
exactly how much more. The same thing applies to any system. Every vari-
ability within an already saturated group of people leads almost to paraly-
sis, in addition to the indeterminateness of the real completion time of the
activities. It is important, then, that a group of designers called upon to solve
a problem has a sufficient level of flexibility to accommodate the variables
that kick in during the various phases of design. This will enable us to avoid
the risk of response times stretching beyond estimated times, which are
almost always calculated without considering the impact of the rigor and
following of the planning itself. What emerges from this is the importance of
understanding what can help to balance individuals and working groups so
their level of saturation does not go beyond a certain limit.
Think of what happens on a highway with heavy traffic when there is
an accident. The traffic slows down more and more, coming to a complete
standstill until the damaged vehicles are removed. The same accident on a
Figure 2.21 Effect of overload on the development time. (Source: Morgan J. and
Liker J.K., The Toyota Product Development System: Integrating People, Process, and
Technology, Productivity Press, 2006.)
fast highway with light traffic will not lead to the same queues. The traffic
will continue to flow at practically the same speed (Figure 2.22).
The lesson here for our teams trying to innovate the next product or ser-
vice is that they need the time to think if they are to truly innovate. If they
are overloaded, then their ability to come up with great ideas will also be
slowed down (or even stifled) as they try to navigate through the excessive
loads of work.
2.5.3 The Eight Principles of Flow in Intellectual Activities

There will always be “accidents” or unexpected surprises in our working
days. We can work to minimize them, but we cannot eliminate them all. It
is essential to try to understand how to make ourselves and our product
groups more flexible to deal with these surprises without having them upset
the entire system.
Techniques exist that, if adopted, can bring benefits to your daily work and
your project teams. We have summarized them in the following eight prin-
ciples, with the aim of making them “usable” by anyone in any given project.
2.5.3.1 Level the Arrival of Work

Fluctuations in the arrival of work to be done inevitably causes queues in
any system. For example, if four arrive today, one tomorrow, and ten the
Figure 2.22 Queuing theory and comparison with highway traffic.

Processes ◾ 95
next day, this will lead to interruptions and to material lingering on our
desks, in our PC, in our heads. The time it takes to clear the work will tend
to be variable and will inevitably be longer. It makes sense to try to “level”
the arrival of work in coming to us and our team members. In the work
teams we deal with, we always try to put into practice anything that favors
as consistent a workload as possible—for example, doing things so that
information comes in and goes out in “digestible portions,” rather than “fast-
ing” one day and “getting indigestion” the next. We need to be constantly
receiving work, but not overloaded. Our minds always need something to
think about, otherwise, it will do it by itself. This is one of our biological
characteristics.
Greater attention toward a pragmatic leveling of incoming work for our-
selves and others will help to increase fluidity and intellectual performance.
The same principle holds true when we organize our days. If, for example,
we arrange packed programs without inserting breaks or buffers between
certain activities, it is very likely, if there is the slightest interruption, that the
project timing will fall apart, landing us quickly in the situation of paralysis
we just talked about. It is therefore worth incorporating buffers of unfilled
time into our days and weeks, so as to provide a cushion against variables
that we cannot predict to ensure that downstream customers have a consis-
tent and predictable arrival of work.
2.5.3.2 Minimize the Number of Activities in Process

The previous discussion regarding multitasking brings me immediately to
another effective technique for ensuring a constant flow of activities. If we
reduce the number of activities on which we are concentrating, in any given
time, we will undoubtedly favor not better flow, but above all higher quality
in the completion of the activities themselves.
We often tend to overestimate our short-term capacity and reciprocally
underestimate our medium- and long-term capacity. This leads us to over-
load ourselves by starting lots of activities that end up sitting on our desks. If
we learn to dose activities, tending to limit them to a few at a time, our per-
formance over time will certainly increase, as long as we condition ourselves
to live with the apparent state of frustration of having to put off some things
rather than others. We say apparent because one thing is to begin lots of
things, another is to complete them on-time. In fact, we often delay the clo-
sure of activities when we try to simultaneously manage more of them than
is humanly possible.
Working according to this principle of small batches means making an

effort to subdivide everything into small pieces, moving work forward in
small steps. Focusing on small steps, in all the projects we have experi-
enced, has always created a favorable climate for success, positively reinforc-
ing that the project is truly moving forward. Success breeds success, failure
breeds failure. Our minds do not distinguish the small success from the large
success. Emotionally speaking, every success counts, large or small. Planning
a small thing and succeeding in finishing it on time is a powerful mental
weapon that gives us the strength to keep moving forward, much more than
planning a big thing and waiting for its successful conclusion over a longer
period of time. We might say, and plan, that we want to lose twelve pounds
in a year, but it is much harder to accept rather than a goal of a quarter of a
pound every week. Our minds will tend to put up much more resistance to
a big, daunting objective, even if more time is allowed for it. We will never
tire of repeating that in managing projects, the key elements are the people.
Therefore, we must never lose sight of what encourages change in people
and what, instead, blocks it. In this case, not only does working in small
batches improve flow but it also improves morale. Some Lean development
organizations have used the concept of “WIP caps” to limit the number of
different projects active in a work group at a given time. When one is com-
plete a new one can enter the system and begin to be worked on.
2.5.3.3 Reduce the Size of Activities

This principle is a close relative of the previous one, and consists of reduc-
ing the size, in addition to the quantity, of activities under way. If we want to
become masters of flow and timely execution, we must remember: “Simple
is actionable, complicated is interesting.”
Simplicity is something we can act upon, complexity is interesting.
Interesting for whom? It is interesting for our mind, which must “keep busy,”
but is it really value added? Often we confuse the things we actually com-
plete with the things we have the illusion of doing just because they have
entered our vortex of thoughts.
The American scholar Tony Schwartz has spent many years studying the
factors that favor the performance of people engaged in office and intellec-
tual activities in general. What supplies energy and what drains it. Schwartz
affirms that the average length of time any person can give with maximum
intellectual productivity is no more than seventy-five minutes. And so,
Schwartz claims, it is not clever to fill our days with activities that exceed this
Processes ◾ 97
time span, if we want to simultaneously pursue results and a profound state

of well-being.13 About 72% of people have serious difficulties in focusing
on one thing at a time, causing slow-downs and dips in energy that impact
both on our psychological and physical state and on company performance.
What can be done? Well, divide up, for instance, our activities into blocks of
no more than one hour, excluding for that hour everything else. Immediately
afterward, plan to insert mental breaks, in order to regenerate and prepare
ourselves for another high-concentration session. Training ourselves to fin-
ish activities, and not just to get them started, is fundamental. We have never
seen forms of stress appearing in really productive people who are continu-
ally able to manage their energy. Keeping the size of the individual tasks
small is not just indispensable, but crucial, because it sets in motion virtuous,
emotional circles that project us into more creative thought over time. We
become masters of flow, effective creativity and consistent action.
2.5.3.4 Establish a Regular Cadence

To explain this technique, we want to relate an example from one of our
projects. The whole group was accumulating delays in the project plan.
Thanks to weekly alignment meetings, as an analysis of the causes of various
anomalies were undertaken, it had become clear that one of the designers
was in the unhappy position that he had become a bottleneck for that work-
ing group for about three weeks in a row, slowing down the work of his col-
leagues, who were waiting for his designs and for information from him in
order to move on with their own activities. When we tried to see why these
delays were occurring, the “truth” soon emerged. The designer had a second
task besides that of working on the project for the new product: he was also
responsible for solving technical problems associated with existing products
already in production. That is to say, technical modifications, revision of
designs, and assistance in solving problems for already-launched products
posed various kinds of problems in the assembly or testing phase prior to
shipping to customers. Colleagues from the production department called
him up frequently to sort out problems, demanding his attention, pushed by
the “rush” to meet imminent delivery deadlines. He was forced to frequently
interrupt his design activities, and in the end spent whatever remaining time
he had on the project. To make matters worse, he could not even provide
a reasonable estimate of when he would finish his design activities. He was
frustrated because the interruptions made him lose concentration, time, and
effectiveness, and because the number and duration of his interventions in
the production department were variable and unpredictable. The solution

was to move toward standardizing and planning these interruptions. This
was done by assigning a predetermined duration for the interventions: regu-
lar cadences. We began by setting aside a daily slot, which was initially in
the early afternoon from 2pm to 3pm. His colleagues in production were
asked to prepare for that session, drawing up a list of problems requiring
solution, to clarify the scope of the problem, and to focus on the fact that the
discussion needed to be completed in the allotted time slot. This apparently
simple change in direction led to some initial difficulties due to the resistance
to changing habits of the production personnel and the designer himself.
The instinctive and immediate phone call had to give way to a laying
out of the problem in a notebook or, even better, on a board, for a subse-
quent focused action to resolve it. In the face of the fear that it would take
longer to solve the problems, statistics came to our aid: the average wait
for real, post-call intervention and for definitive resolution of the problem
were almost the same as the time scheme we were proposing, the differ-
ence being that the enormous amount of wasted time generated by the calls
themselves, frequent interruptions, lack of concentration, and variability in
the duration of activities was eliminated. It was great to see the phone ring-
ing less frequently, hearing much less shouting, and at the same time to see
more problems being solved at a regular cadence while also seeing the proj-
ect work move forward in a more leveled manner. After a few weeks, the
designer was no longer a “bottleneck,” and the meetings in the production
department went from being daily to being every other day, because with
this type of intervention, the group became not only more efficient in using
its time, but also more effective in solving problems.
During a seminar, after we had described this case, one of the partici-
pants exclaimed:
One thing I’ve understood… by doing this, people, besides wait-

ing, also learn to think… I kept the phone off all day today, fol-
lowing your instructions. I understand why, when I turn it on at
the end of the day, I will find, as on other occasions, about ten
unanswered calls… but the great thing is that I’ll find that eight of
the problems, the reason for the calls in the first place, will already
have been solved!
As we can see, it is critical to set up a kind of “heartbeat” within the

working group, in order to make as many things as possible happen in a
Processes ◾ 99
routine cadenced fashion. The first thing to do is to avoid the typical chaos
of input and output, that is, in statistical terms, to avoid excessive variability
in input and output for the typical work centers of a project: individuals.
2.5.3.5 Plan Results and Not Activities

What does this mean in practice? We have already seen the importance of a
regular cadence in project activities. Let’s now look at another aspect.
Often, there is a tendency to plan activities and to focus attention on
doing, rather than being guided by a plan based on the final, and intermedi-
ate, results to be achieved throughout a project. It is not enough just to set
up routine meetings with the team. It is also important to organize them not
only to talk about or to do activities, but to evaluate the intermediate results
of single activities.
This is a basic concept, yet it involves a completely different mental
attitude. Each individual and each subgroup in the team always works on
something concrete, which at a certain point will be presented to the rest
of the team. For example, if the team has decided to meet once a week, it
is not sufficient to have a status report; it is equally important to predefine
the outputs to be evaluated during each of those meetings. The idea here
is to plan, over time, not activities, but real output, which must be rendered
visible in a clear and unequivocal way at each meeting so a decision can be
made.
The focus shifts from the planning of activities to the results of those
activities, at a predetermined pace. If, for example, we are talking about
design activities, the activity of “designing” is divided up into small packages
of drawings so that each design is literally “pulled” through time at the pre-
defined cadence. During the periodic sessions with the other team members,
the focus will remain on the results achieved in the form of small packages
of concrete, drawings, which will be physically evaluated with the rest of
the team. Whenever we succeed in introducing “rhythm” in individuals or
groups, we benefit in terms of creating focus, a sense of urgency, and ulti-
mately project efficiency. This same concept is valid both in our private lives
and in the running of professional projects, big or small.
2.5.3.6 Pull Planning

Another high-impact technique, to be used whenever embarking on a proj-
ect involving a lot of people, is Pull Planning. This approach can make
a noticeable difference in meeting the schedule. Imagine you have to get

objects from one end of a tube to another, but that the order, sequence, and
type of objects required are known only to the person at the other end of
the tube. Would you dream of beginning to push your objects through the
tube? Or would you prefer to get them pulled by the person at the other
end? In a restaurant, unless we are talking about an establishment offering a
fixed menu, no one would start bringing out food to the tables without hav-
ing consulted the diners first. Too often on actual projects, we “push” for-
ward the fruits of our activities—drawings, elaborations, sums, assessments,
decisions, and so forth—based on what we do ourselves, and the pre-estab-
lished project plan, without really considering that in group activities we not
only need to deliver what is required, but when it is required, and in the
right amounts and at the right place. This applies to all types of information,
physical objects, designs, decisions, assessments, elaborations, approvals, etc.
Think about how often we have to go back to something because we did
not take the trouble to find out exactly what was needed from us, when it
was and who needed it. During Lean training and workshops, we run vari-
ous trial simulations to ascertain the difference between “push” planning
and “pull” planning, measuring variations in performance in the two cases.
There is always a surprise for participants when looking at the marked dif-
ference in progress the simulated project makes at every stage and the asso-
ciated benefits become apparent. It is a fun way of stimulating reflection and
learning at the same time.
Every resource involved in a project responds to the needs of one’s inter-
nal and external clients, and should only produce what is requested and
when it is requested. This facilitates communication, effectiveness, and team
members’ morale as they feel they are better supported by getting what they
need at the right time to do their job.
Even if this seems so obvious to the reader, why is this so difficult, and
indeed almost never happens, in real life?
Because both suppliers and clients have to communicate their needs
at the beginning and constantly throughout the project. In the gas-elec-
tric turbine company, they have established pull through boards at each
step of the process. It is like Kanban in manufacturing. Each step of the
board has cards showing what work has come in that is waiting to be
worked on, what is being worked on, and what is completed for their
customer—the next step of the process. When work in the next process
is complete then the next work product they require is passed along and
the boards are updated. A task is complete and goes out and another
Processes ◾ 101
task in queue is started. There is a cap on work-in-process to limit the

individual tasks worked on at a given time which helps timely comple-
tion of each task.
2.5.3.7 Avoid Overloading

In addition to the queuing issues mentioned in the prior section, what
do we risk when we find ourselves at the limits of capacity? Instinctively,
perhaps, one of the first thing we might say is that “there is no time to
think.” Another response might be “loss of flexibility,” or “no room to
deal with certain problems in depth.” All this is true. To these answers we
might add a consideration. Our performance, in terms of duration, quality,
and punctuality, together with that of our groups, will, in the long run, be
heavily influenced by this sense of “activity suffocation.” We will tend not
to clearly see the quality of our work, we will have no room for improve-
ment activities, and for the inevitable surprises that crop up in any context.
In a word, we will no longer be able to see beyond our noses. This is
why excellent companies give great emphasis to the concept of resource
leveling, especially in the development of new products. If we want to
maintain a high performance level of innovation, it is important to keep
checking that we and our colleagues are not becoming overloaded. In
the following pages, we will try to understand how it is possible to tackle
the question of resource leveling and of the standardization of capacity
and processes in order not to end up being “suffocated” by the activities
themselves.
2.5.3.8 Minimize Interruptions

The principles discussed thus far help not only to establish agreed frequen-
cies and duration for personal and group activities, but inevitably encour-
age the creation of new rituals and new mental attitudes. People become
aware that many areas of inefficiency can be eliminated with appropriate
preventative activities. As we said when talking about multitasking, one of
the most insidious forms of inefficiency in group activities relates to con-
tinual reciprocal interruptions.
Since notable improvements can be gained just by applying the seven
previous principles, with the ten recommendations grouped below, it is
possible to achieve a state of genuine hyper-productive calm, channeling
activities fluidly while encouraging individual creativity without sacrificing
the maximum amount of collaboration within the group. Let’s look at them
one by one.
1. Create and use checklists. Companies such as Toyota, use Engineering

Checklists (now computerized) during their projects. These enable the
rapid resolution of a problem proactively based on past experience.
2. Define in advance the answers to recurrent questions, just like the FAQs
often used online and share them with the entire team.
3. Supply as much background information as possible when assigning a
task, calling a meeting, or communicating knowledge to someone, so as
to minimize the interruptions from people asking questions afterward.
4. Take the trouble to train people before they commence a task.
5. Do not just delegate activities, but also responsibilities. Assign complete
tasks that encourage others to be responsible for a given end result that
needs to be achieved.
6. Group together similar activities (batching), especially when these
consist of a large number of small but potentially “distracting” activities,
because they are liable to arrive when you least expect them (email,
administrative matters).
7. Fix “windows of availability” in advance with your colleagues and assis-
tants for them to be able to collaborate with you.
8. Carefully organize the archived so it is easy for everyone to find
materials, drawings, and information relevant to the project in hand.
This saves a lot of time searching or having people disturb others re-
requesting information.
9. Learn to carve out “sacred” time slots—moments of isolation lasting
sixty to ninety minutes, during which you cannot be disturbed for any
reason. Mark these in your calendar.
10. Work empty timeslots into your schedule for rejuvenation, on a daily,
weekly, and monthly basis, alternating them with periods of high
concentration—like an athlete, who always rests between one train-
ing session and the next. If we do not arrange them in advance,
our bodies and minds will do so of their own accord, because it is
impossible to remain continually under tension without burning out.
Individual activities such as exercise or meditation and team activities
such as team building exercises or outings are a few good ways to
rejuvenate the creative energy of yourself and your team. Good sense
and intuition will help you to learn how often and how long to do
these.
Processes ◾ 103
The table below summarizes the eight principles of flow for office activi-
ties. Practice them and you will see your team’s effectiveness, and your own,
will improve and your daily stress will be reduced.
The eight principles of flow in intellectual activities

1. Level the arrival of work
2. Minimize the number of current activities
3. Reduce the size of activities
4. Establish regular rhythms
5. Plan results and not activities
6. Pull planning
7. Avoid overloading
8. Minimize interruptions
2.6 Resource Leveling in a Complex Project

There is the risk you cannot afford to take, there is the risk you
cannot afford not to take.
Peter F. Druker
However much planning we do, there will always be some moment in a
project when you find yourself having to deal with the unexpected, areas
of criticality liable to throw your schedules, and project results off course.
In these moments it will be necessary to increase capacity, the number of
resources required, to get back on track. A “bit more time,” a little more
effort, a few extra people, a few more hours, days, or months to “do things
well” and finish on time. Whether we are part of a large company or a small
one, whether we are part of a big group or even just on our own, we are all
likely to face such problems at some point in the course of a project. How
do we make this happen?
2.6.1 A Model for Leveling Workloads between People

To deal with variations in required capacity, Lean companies use meth-
ods that are truly unique in certain respects, and which yield unexpected
positive results when applied in any kind of business. Figure 2.23 illus-
trates a possible model for the use of human resources in the course
of a project, drawing upon real cases. In the case illustrated, note that
resources need to be increased from the second month on, the phase
in which the project moves toward the “freezing” of the designs. This is
the period in which the exploration of concepts, what is called Kentou
(study) in the Lean Product Development terminology, is completed. In
the graph, you will see various bands relating to the different people
engaged in the project. We observe that the product engineers are
assigned permanently to the project and are supported by technicians
and designers, who belong to a central group and who go to lend a hand
when there are workload peaks in various projects. In the example, you
can see that in the first two months after Kentou, there are up to ten
people working on the project. This figure then rises to thirteen, thanks
to the assistance of the support technicians over the following three
months along with the help of designers and their co-development sup-
plier, before dropping back to seven through to the end of the project.
This resource flexibility in the course of the project is made possible by
a strong standardization of methods and tools, without which it would
Figure 2.23 Example of leveling resources in a complex project.

Processes ◾ 105
be impossible to quickly flex in fresh resources as has happened here.

Without good standards, an enormous amount of time would be wasted
while the new arrivals tuned in to different working groups’ ways. It
is very important to have these safety valves, whereby technicians can
go where there is greatest need. The central services group, in agree-
ment with the various Project Managers, decides whether intervention is
required or not. These technicians are never transferred permanently to
individual departments, because this would make it impossible to con-
tinually distribute resources between different projects. This group of
technicians should not be confused with designers and suppliers from
outside the company, who may be called upon to perform certain tasks,
for instance the preparation of drawings of components designed by the
product engineers or the suppliers themselves.
Obviously, what we have seen here is just one example. In differ-
ent areas, the percentages and periods may vary quite considerably, but
the most important thing, the key message we want to convey with this
example, is to have you reflect on the importance of analyzing work-
loads upfront and plan as best you can for the invariable peaks that
will occur. We can either assign our own project resources, so as to
ensure a leveling of workloads and/or resort to external or other inter-
nal resources, creating a kind of buffer to avoid problems when needs
arise in the course of a project. Not doing so, and hoping that every-
thing will work itself out somehow, or worse, waiting for the problem
to explode in our faces, places us in a position where delays will be
almost inevitable and the degree of stress higher. One final tip, if you
decide to employ this technique: using human resources from outside
the company could potentially lead to a loss of know-how. Decide in
advance what is core business/knowledge and what is not, i.e. what is
valuable for your competitive edge, and then decide what to assign to
internal company resources and what can be done by people outside the
company.
2.6.2 What Happens if There Are Just a Few

of Us or I Am on My Own?
In this case, paradoxically, the problem of balancing and leveling workloads
is even more critical, because every obstacle will reflect directly on the final
outcome of your project, in terms of time and quality. The available tools
are the same as the ones used for large projects, but here it is particularly
important to personally address the following issues:
1. Delegate: you must learn to delegate in advance anything that does

not have to be done by you. The more you train yourself to apply the
concept of delegation in managing a project, the better you will learn
to really grasp what it is important for you to do on that project to add
value to the customer and where others are able to help. Here, a bit of
humility helps. Frequently, we delude ourselves that we are the only
ones who can do it right. If that is really so, then we need train others
so they can do it in the future.
2. Flexibility buffer: plan in empty space for unplanned/unknown activi-
ties. Your days are short, and your capacity finite. Bearing this in mind
from the outset will help you find the time needed to take the difficul-
ties you encounter in stride.
3. The eight principles of fluid activities: application of the eight principles
described in the prior section can help you to eliminate many difficul-
ties in the management of your projects, at the same time enhancing
effectiveness and individual well-being.
2.7 Lean Project Management: The Art

of Surfing Applied to Projects
You can’t always get what you want. / No, you can’t always get
what you want. / But if you try sometimes, you just might find /
You get what you need.
Rolling Stones
2.7.1 Taking Project Times and Deadlines into Account

In a long-term product strategy, missing a deadline is often more seri-
ous than miscalculating a cost or not quite meeting a performance target.
Imagine subdividing an entire project into ten subgroups. Imagine making
each subgroup then responsible for 10% of the cost and 10% of the time
of the entire project. Now if the head of one of the groups makes a 10%
error in his costs, this will cause a 1% cost problem for the entire project.
If instead the same person fails by letting 10% of their target time slide
Processes ◾ 107
forward on the critical path, this will cause, in most cases, a 10% delay
in the entire project. A delay like this will also have an impact on other
projects, creating what the British call exhaustive “scattering,” as well as
leading to the loss of market opportunities for the entire organization, i.e.
unforeseen impacts on other factors, future projects, changes, unforeseen
work, costs of efforts that are taken away from the new products, and cus-
tomer satisfaction. This is a well-known concept at Apple, where they have
always given priority to the timing of the project at the expense of other
factors. Remember the first iPhones and iPads on the market? They were
sometimes imperfect, but available, to the great satisfaction of old and new
customers. Late projects and uncompleted cycles, at the individual level,
are the main obstacle to the development and release of new energies and
opportunities.
2.7.2 Is the Right Information in the Right

Place at the Right Time?
There is another common question that arises during management reviews:
will the project be completed before the deadline and with good results?
Unfortunately, there is no guaranteed answer to these questions. During a
project, the information is there, true, but the project is a dynamic entity.
Plenty of information will arrive eventually, but almost always late and
piecemeal to answer the questions.
And the managers?
Often more concerned about the results in the short term rather than the
processes that lead to the results, they may find that they have no real con-
fidence in the progress of a project in terms of cost, quality, content, perfor-
mance, times, and deadlines. They will try to trust the information provided
by their people, but basically the elements that they traditionally had access
to for an objective comparison are almost always anecdotal words, status
summaries, or plans that are drafted, re-drafted, and revised many times
during a project.
One of the most common beliefs in conventional systems regards the
cause of project delays it is believed that every delay is due to a departure
from procedures and standards, together with the fact that their people
are unable to meet the targets. Following this logic, the most common
cause of delays would be the widespread lack of discipline. If so, all it
would take to eliminate the problem would be greater discipline…and in
fact many companies invest time and money in large bureaucratic efforts,
the construction of planning sheets and highly detailed processes, at least

detailed on paper, that in the end turn out to be slow and costly. The con-
ventional Project Managers attempt to respond to the doubts and questions
that I have given you so far by creating highly detailed plans and desper-
ately try to stick to them giving them the illusion they have everything
under control.
Instead of learning to “surf” the waves, conventional organizations try to
control them.
But this almost never works.
It almost never works to tell everyone what to do in the greatest detail
possible. It almost never works to do such detailed planning and scheduling
in order to make things happen in the right sequence. It almost never works
to try to make the knowledge flow through channels in an extremely rigid,
predefined way.
Lean companies have learned over the last century how to “surf” the
waves during projects, without vainly wasting time in order to control the
waves themselves, to proceed without major disasters or glitches, and with
great flexibility from start to finish. In addition to the eight principles of fluid
activities illustrated in Section 2.5, other differences emerge between tradi-
tional systems and Lean Project Management systems.
2.7.3 Value Creating Management

This definition comes from Dr. Allen Ward, one of the first people to have
studied the Lean Development model in both Japanese and American com-
panies. According to Ward, project supervisors, managers, Project Leaders,
and entrepreneurs should create value by designing product development
systems and spreading knowledge of them. In this way, the activities of
team members are not tightly controlled, but the plan is used for overseeing
and guiding them.
What does “thinking more about the process” mean? First of all, it means
understanding that whenever an expected result is not achieved it is because
there is a problem at the root of the process and not because one or more
people have simply “failed.” People are, in the vast majority of cases, work-
ing in good faith.
We have rarely witnessed people who had deliberately decided not to
achieve the pre-established results, but if something goes wrong there, is
almost always a systematic cause that needs to be identified and removed.
This should be the main job of the manager in a project team.
Processes ◾ 109
The manager must strive to see his or her own system in this light and
therefore always seeking ways to help teams achieve better results. This also
means being there for the team, to remove barriers and obstacles that hinder
the achievement of results. The more managers learn to observe their pro-
cesses and teams, the more they will learn to understand the real causes of
inefficiency and ineffectiveness.
Why do we embrace this approach versus the traditional command
and control approach? The better the system results are, the more success-
ful managers will be, and vice versa. But if managers only continue to be
“part of the system,” they will not be able to continuously improve their
team’s performance. So they have to take a step back to see the system in
its entirety, attempting to understand what actions must be taken to increase
the effectiveness of the system itself. As coaches for their teams, command-
ers of ships and their crew, they must try to take the type of actions that cre-
ate value for the customer.
The manager’s only goal, in the spirit of Lean thinking, is to increase the
percentage of added value with respect to waste, because every time this
is achieved, the team and the system acquire a little extra speed, do more
things in less time, and with less waste. Therefore, the manager becomes a
system designer, and not an authoritarian manager who gives orders. He or
she adds and spreads knowledge.
2.7.4 Who Promotes the Principles of Flow on a Project?

For complex projects, the Chief Engineer is the person who manages the
pace of a project, and the one who shapes the true rhythm of the proj-
ect. The flow and control of the workload are supervised by the Project
Managers, who must guide teams in such a way as to ensure that there are
always adequate resources and that there is always a cadence to the project.
In many projects that the author has guided in Italy, he always introduced
the concept of Lean Project Management. In this new perspective, a team
leader is identified and given the responsibility of being the “father” of the
project, and increasingly becomes the figure that gives the rhythm to the
whole team, having first made sure that everyone knows the rules of the
game, i.e., they all understand the Value Stream of the project.
The principle of Pull Planning mentioned earlier in the chapter comes
into play here. In 2004, when Luciano visited Toyota in Japan, he began to
learn to recognize the characteristics of winning teams and individuals. Here
is an example. No manager in a meeting would accept someone stating
after the fact that they were late with an activity, perhaps because they did
not have the information from a certain supplier or a certain colleague. The
concept, which they took for granted, is that those who are responsible for an
activity must always obtain what they need to achieve the result.
Therefore it is the “customer,” internal or external, who must shed light
on what is needed, and after having done it, they must make a personal
commitment to effectively communicate and gain consensus with their
“supplier,” and even go physically get what they need, if necessary. This is
a full dynamic pull. The management of the project is much lighter, leaner,
because first and foremost, care is taken to effectively spread and commu-
nicate the overall vision of the project. An effort is made to have a series of
events that are very well defined and clear from the start, and within these,
the project now relies on micro-planning what is done by the individual
players in the project. In this way, the various departments and different
people clarify the information that they all need, because their real goal is to
reach the next target event in time.
The Project Manager focuses his or her energies on the critical factors that
lead to results, rather than on reporting and the continual updating of plans.
This involves having a clear map of the project, controlling the pace and the
planning of these target events, with a clear indication of what one wishes
to achieve. At the same time, care must be taken to provide the knowledge
that is shared by everyone, putting in place the conditions to encourage the
spreading of physical, virtual, and computer information. In practice, the
Project Manager is the one who must create the right conditions for events
to flow at predefined intervals. It is important that there be a “rhythm” for
individuals and for groups to keep a sense of urgency throughout the proj-
ect and give the team confidence that the project is truly progressing.
So we can then say that when the conditions of “flow” and “pull” are
embedded in a project, it will always be the customer of a downstream pro-
cess who will “rhythmically” ask for what he or she wants from their own
upstream supplier. Here is a summary of the criteria used to give rhythm
and pace to a project.
◾ Target events: (Design Review and Project Review) to “pull” the develop-
ment of the team forward and ensure the success of the project.
◾ Supermarket of shared information from which people can “pull” what
they need.
◾ Predefined rules of the project, so that people know how to get infor-
mation from each other to minimize interruptions.
Processes ◾ 111
◾ Rhythmic cycles for all development activities so that everything will

proceed in a regular way and the knowledge will be channeled in a
smooth flow.
◾ The value-creation oriented attitude of managers: rather than just give
orders and ask for demanding and complex reports, they must effec-
tively support those in the front line of the project development by
removing barriers to flow.
2.7.5 How Pull Planning Is Put into Practice—A Real Case

In the example in Figure 2.24, we can see a real case of the development
and validation of the new products of a well-known company. Note the
presence of five different working groups: product developers (group 5),
designers (group 4), logistics for ordering the pieces (group 3), assembly
line for the construction (group 2), and validation and final testing of the
finished components (group 1). In this case, the previous local improve-
ments of the various departments had resulted in a lengthening of overall
lead times, as well as an increase in the stock of semi-finished compo-
nents that had been developed or were in the process of being developed.
Despite the fact that the various working groups had done some internal
Value Stream Mapping, with a view to reducing waste, the total time was
Figure 2.24 Example of Pull Planning. (Based on case implemented by J. Drogosz at

a large industrial company.)
still not materially shortened and a lot of overtime in assembly and valida-
tion was done to crash the schedule on certain projects. When the whole
team stepped back and looked at the entire system, the true wastes inhibit-
ing flow came to light. For example, the planning time of validation (group
1 in the figure) was one month in the project plan, but in reality, this month
was made up of many small activities often lasting far less than a month. In
fact, the validation team ran on a weekly schedule while the projects used
monthly views of the schedule. By lining up the tests, as they really hap-
pened in validation, they were able to discover the real weekly material and
information needs required to achieve each individual test. In the true “pull”
logic, the assembly department (group 2 in the figure), was “pulled” by the
customer (validation), focusing its work on assembly, exactly as requested
by its customers downstream.
This meant no more requests for a large batch of components and infor-
mation for a period of one month for the validation, but requests for what
was required in the same department week by week, piece by piece, until
one group was in “full pull” with another. This meant forcing group 2 to
assemble the parts needed exactly in the required sequence, drastically
reducing both the number of parts constructed and not used, as well as
the dead time between one department and another. What happened as a
result? Group 3, the logistics group that ordered the parts from suppliers,
was involved not in ordering the whole quantity of necessary components
all at one time, but the parts that would be used in the correct sequence,
synchronizing and aligning itself with its own customer, group 2.
This part of the work was the most difficult for several reasons which
we will explain in detail, because it exposes a very common problem.
After putting group 2 into “pull” with group 3, it was natural to do the
same thing with group 4, or with those who do the designs, and therefore
doing things in such a way as to no longer have designers who complete
their designs independently of the rest, but designers who execute their
designs exactly in the sequence identified by group 3. In doing so, a new
bottleneck actually emerged after there was flow between the depart-
ments: the logistics group.
Why?
Because, in reality, they were used to doing things once a month and had
also reduced the number of people in the department, inasmuch as they
were not needed every day. Therefore, they did not create the conditions
to work fluidly and in a synchronized way with their own internal custom-
ers and suppliers. The local optimum, at times, does not match the global
Processes ◾ 113
optimum. This case study illustrates why it becomes important to establish

what is best for the entire system before one decides on the right number of
people to be added at the various points of the system. The ultimate goal for
the interests of the company is always a goal for the entire system, not the
individual department.
Once the new method of synchronization and “pull” of the various
departments was defined and shared, it was then made visual. This tech-
nique, similar to fundoshi scheduling at Toyota, allowed for the visualization
of all the deadlines within a project: all the materials, designs, and infor-
mation that are linked to one another. All this was done with large, clearly
legible billboards so everyone clearly saw what was expected in each group,
each week. This is an example of Lean at its finest: simplicity and attention
to effective communication. People no longer have to go in search of the
data, no longer have to make an effort to discover problems, and no longer
have to even ask for information.
Giving high and shared visibility to the planning of needs and the
extent to which those needs are met leads to management benefits that are
absolutely underestimated by those who continue to trust in nothing or in
highly complicated models and control schemes that are only visible on
individuals’ PCs. When the data and the information were readily visible,
to the engineers, operators, and the Program Managers, the focus shifted
from going over all the details to the management of the exceptions and
the real critical points. It would be enough, for example, to go twice a
week past the billboards and information to verify “live” how things are
actually going, to immediately identify the priorities that deserve action,
and to easily see that small problem before it becomes a large critical
problem. No manager would (or could) open a table or matrix on their
own PC, because it is complex and difficult to “navigate.” Instead, when
the information is communicated in an easily visible way, we realize that
the more easily we learn to access critical information, the more easily the
problems come to the surface and again the more easily we can resolve
them as a team.
2.7.6 Detailed Planning of the Flow of Materials

and Information: Fundoshi Scheduling
Let us take a more detailed look at the tool of fundoshi scheduling. This con-
sists of a large billboard on which all the steps needed to move materials and
information within a project are scheduled with precision, guided by the final
goal. The final delivery date is connected to the target dates of the submis-
sion of each design, passing through all the intermediate operating phases.
The great value is in creating detailed links between the individual ele-
ments of the entire chain: from the date of submission of each design to the
forecast dates of delivery of that component, and from these to the expected
dates of manufacture or assembly or testing, up to the delivery of the fin-
ished product. Effectively, a chain of dates is being created, going backward
to link each individual project event in such a way that it provides the exact
target sequence for all players involved in the project, internal and external.
How is this useful?
Let us imagine, for example, a product composed of a number of compo-
nents equal to approximately two-thousand units.
Is it possible to turn out all the designs in a single day? No.
Is it possible to turn out all the designs in a week? No.
In fact, the work that is done by designers, logistics people, assemblers,
and suppliers can require anything from a few weeks to several months,
depending on the type of product. In order to safeguard the needs of those
who will be using the designs down the chain from the designers, it is
advisable to make a detailed plan of the correct sequence of designs, taking
into account the functional, technical, and design characteristics of the prod-
uct, but also the presence of any technological and logistic constraints that
make it impossible to design one particular piece before another. All of this
has the goal of making the entire flow as fast as possible without unneces-
sary glitches or delays.
What is the starting point?
The starting point is that date in which we wish to complete the final
product. Starting from this date, we begin to go backward, inserting the
dates that are part of the natural evolution of the product, which, in the case
of the example mentioned previously, could be as follows:
1. Final testing.
2. Component testing.
3. Instrumentation.
4. Final assembly build.
5. Sub-assembly builds.
6. Deliveries from suppliers.
7. Internal manufacturing.
8. External manufacturing.
9. Orders to suppliers.
Processes ◾ 115
10. Issue of bill materials.

11. Issue of the final drawings.
12. Development of component drawings.
13. Development of the system.
When the sequence of target dates for all events is clear, the list of target
dates required for the issue of the individual components becomes equally
clear. At each step, there is a discussion between customer and supplier to
define needs, identify constraints, and agree upon final delivery dates. Next
to the entries for individual target dates/quantities, the actual dates and any
roadblocks will be posted on the billboards. As soon as there is a deviation
from the target dates on the billboard, it is easy to see the “danger” points in
the project, and the entire team can take appropriate countermeasures.
2.7.7 The Management System and Review of the Whole Project

In Figure 2.25, you can see how the entire pace of a project can be planned
from start to finish. It is a fundamental process for all projects that we call the
Project Review System. It starts with a subdivision of the entire project into dif-
ferent macro-phases. A key date is established for each of them, by which the
“salient events” of the project in relation to that particular stage must be com-
pleted, the so-called key deliverables, documented and objectified.
The activities required for realizing the key deliverables are included in
the detailed planning sheets, which are managed directly by the individual
responsible for each key deliverable. The progress of each element and the
person responsible for it are clearly charted, allowing for a visual control of
the entire project with a single A3 sheet.
In the example in Figure 2.25, the initial stages of development of the
project were entered: this included the Concept Paper, the exploration phase
of the various conceptual alternatives, the Kentou (study) phase of the prod-
uct, the system design phase where the whole architecture of the complete
system chosen was designed, then moving on to the stage of detailed design
and prototyping. The testing and validation phase always precedes the mass
production phase. In this case, since we are talking about mass production, it
is essential that the final phase of analysis of market feedback is included.
The choice of the macro-phases can change from one project to another,
but it is essential that the entire project is divided into phases that are easily
understood by everyone, within which the information, materials, assess-
ments, and decisions flow easily. At the end of each stage, the so-called
Figure 2.25 Lenovys Model of Project Review System.
Project Review must be completed. These are similar to the Milestones in the
Stage-Gate product development processes used by many major companies,
including Procter and Gamble and Siemens. These are times when the entire
team critically reviews the project’s progress by reviewing the output list that
should have been delivered by the end of each phase. However, in this case,
we are talking about actual commitments that are made within the entire
team and not arbitrary times based on traditional phase gate templates. This
will then establish the formal rhythm for the project. Having key deliverables
met and checked during these reviews brings a tight focus to the activities of
individual team members between one review and the next.
As we were saying, we have seen similar methods in different compa-
nies, and once again we want to emphasize that it is not the document that
makes the difference, but the social process that brings it to life. The differ-
ence between a successful project and a mediocre one lies in building the
above with the project team and obtaining their buy-in. With this approach,
the team can them make it visible in an Obeya space, and manage through
exceptions to address or prevent problems as they arise. The ability to
involve and empower people in the acquisition of all the data needed to
successfully meet and surpass all the requirements of the upcoming review
is a powerful technique. The Project Review System outline can help syn-
thesize all these factors and simplify management with respect to traditional
project management, organizing the project according to the desired pace
to achieve success. Some of the advanced companies we have worked
with hold their milestone reviews in the gemba and have dispensed with
Processes ◾ 117
powerpoint entirely. They view creating the powerpoint and presenting it

in a conference room as pure waste. After all, they have been reviewing
process through mini-PDCA cycles, every week in their Obeya meetings,
so there should be no surprises in the milestone review. The success here
always lies with the real processes and people, not the tool employed.
2.8 Standardization and Creativity: The True

Strength of a New Product
There are only 3 colors, 10 digits, and 7 notes; it’s what we do with
them that’s important.
Ruth Ross
When it comes to innovation and new product development, we often fall
into the trap of a limiting belief: the standardization of methods and pro-
cesses is an enemy of creativity. Unfortunately, due to this conviction we
have been witnessing, within our companies, various “dysfunctions”:
◾ Great variability in the duration of the processes related to the develop-

ment of products and services.
◾ Difficulty in predicting the actual output of creative staff members.
◾ Levels of quality that vary from person to person, from product to product.
Before understanding not only how creativity and discipline can coexist,
but also how one helps the other, we think it is important to clarify what it
means to standardize, and, above all, at what levels it can be introduced.
1. At product level: to introduce features into our products that avoid rein-
venting something that has already been invented, in order to have a
common architecture and reusable components, and to introduce con-
cepts such as modularity and platforms to design a range of different
models. Therefore, this means anything that can be standardized in the
design of our products or services without undermining the value and
uniqueness of the end customer.
2. At processes level: the second aspect of standardization is related to the
development and design process. Seen from this angle, standardiza-
tion means having activities that are repeatable, and first and foremost,
activities that can be replicated by others, and that are measurable. This
concept is important because by having repeatable and measurable

activities these can be replicated, transferred, and improved. Often, you
do things that you cannot transfer objectively and therefore they can no
longer be repeated or delegated and even improved. They do not have
to be transferred exactly, as in copied, as each situation is somewhat
unique, and we want to encourage kaizen. But the basic concept can
be learned from.
3. At people level: an additional level of standardization is related to the
ability of the people involved, their level of training, and ability to work
in teams. When two colleagues differ substantially in these things,
whenever they are called upon to perform similar tasks, there will
inevitably be differences in performance. The output and duration of
their activities will be clearly different. Therefore, managers need to
align and standardize the technical and social competencies (skills) of
their employees, if they want to systematically increase the performance
of their system. To achieve this level of standardization, it is necessary
to make “knowledge management” a vital part of the organization, with
good planning in both the collection and stratification of corporate
know-how, as well as its usability. This also needs to be coupled with
intensive mentoring to develop the tacit knowledge of our people.
Everything that refers to a company’s know-how, in relation to the prod-

uct development phases, can and must be stored in such a way as to ensure
the capture, sharing, understanding, and most importantly, the applying of
knowledge.
In some companies, this tool is called the “know-how database,” and is a
veritable repository of corporate knowledge. Some typical elements include
design guidelines, trade-off curves, reusable and scalable design packages,
standard parts, production process information, supplier information, check-
lists, the lessons learned from the previous projects, test results, and direc-
tions for avoiding the same mistakes (error proofing lists). It is not a case of
adding more “procedures,” but of capitalizing on real experience, the things
that went well and those that went wrong. Some of these will be general
knowledge such as how to use a 3D solid modeling system and others
will be peculiar to a subsystem, such as plastic-injected molded parts, and
needs to be owned by the deep functional specialists in that group. Thus,
not everybody needs to look at everything. This is a precious treasure to
be protected more than anything else in the company because, if it is well
done, it will contain years and years of practical and usable knowledge that
Processes ◾ 119
can be used by all to make the best possible future products and services
for our customers.
2.8.1 The Basis of Standardization: Knowing How to Use

the Data and Knowledge in Our Possession
We already mentioned in the chapter on the Concept Paper the importance
of the knowledge, or the trade-off curves. These curves represent the rela-
tionships between parameters considered important to the customer. There
is a strong link between these curves and standardization. Imagine, for
example, the case of an automotive exhaust system. The main drivers can
include the mass of the exhaust, the engine’s power, or the exhaust back-
pressure. With well-constructed trade-off curves, we will have many dia-
grams that describe the variation of one parameter with respect to another.
Each time a new need is identified by a customer, or when a problem has
to be dealt with, the first thing we try to do is understand where we find
ourselves on the curve. It is important to be able to understand the impact
of a new request or a change in one variable with respect to the others,
because by studying these characteristics, it is possible to take quick decisive
action exactly where necessary in order to meet the new demands, without
adversely affecting others from a technical or economical point of view.
The construction and use of these curves fit perfectly in the spirit of Lean
management applied to the development of new products, because it aims
to thoroughly understand the reasons behind everything that happens in the
entire operating range of a product, before inventing and testing new solutions.
2.8.2 How Do We Collect Data for a Trade-Off Curve?

We Make Better Use of the Way We Already Do
Things and the Data Already Available to Us
To better understand this concept, I want you to think about the basic dif-
ference between testing and experimentation, between the traditional way
and the Lean way. It is common practice in any company to submit products
for testing and validation prior to release. These activities verify the prod-
uct’s ability to meet operating conditions for the entire life of the product
itself: endurance tests, vibrations, breakage tests, functional tests, etc. In
traditional companies, most of the times that a product is tested, it is com-
pared with a set target for passing the test. It is important to know whether
you have passed or failed that test, with the assigned target for the given
project. Therefore, there is often a final validation report that is a list of tests
that have been carried out with the outcomes that say whether or not the
test was passed or failed. If, for example, our target is to verify that a device
functions for at least two million cycles, traditionally it is enough to stop at
two million cycles plus one.
In a Lean company, during these phases of testing and validation, com-
ponents and systems are tested to their limits whenever possible because
we want to “map” what happens in all potential ranges of operation. This is
done in order to learn as much as possible from a test and may help us to
reuse this knowledge in future products. At Toyota, Honda, Tenneco, and
many other companies, although they have clear test target specifications, it
is preferable to program the test to the point of complete failure, for several
reasons. If we are dedicating our time, energy, and resources in the valida-
tion of a product, it is smart to map everything that happens up to the point
of failure, in order to be able to reuse data and trials for different products.
Furthermore, as good as we are with statistics, in reality, the validation only
measures a part of the real population and a small number of components.
This is why it is preferable to have as much information as possible on the
basic characteristics of this product, for its entire operating range.
Paradoxically, companies that follow this approach have, in the long term,
less need to continuously test and validate components and products. Take,
for example, Honda, which is a company with one of the highest rates of
technological innovation and new product development in the world, but also
has a relatively low rate of prototype production. They have fewer prototypes
but extensively test them to the point of failure for critical parameters they
do not fully understand. Despite taking up more time with validation devices
to test their prototypes, they gain capacity rather than losing it in the long
term, due to the fact of very effectively being able to “capture” knowledge of
their components and devices. Practically speaking, they have less need to
test everything thanks to extensive use of trade-off curves, obtained through
a judicious use of testing in the past. This way, the conditions are created for
not having to test some parts of the new products, because, for example, they
already have the test results from previous designs.
2.8.3 Standardization of Components, Reuse of

Know-How, and Corporate Profit
Imagine what happens to a company’s profits when you can reuse most of
the components, including a new product and the previous one of the same
Processes ◾ 121
family. Or if you can use the same components extensively on various prod-
uct platforms. Toyota has historically re-used up to 70% of its components
on different platforms, ranging from the compact car to the latest luxury
flagship vehicle. And no one is upset (or even notice) when they find the
same door handle on both the Toyota Corolla and the Lexus. This shows
that some details only have added value in the heads of the designers or
accountants, rather than the final customer.
In order to have access to the extensive use of components between dif-
ferent families of products, to benefit from past trials of similar products, it
is important to make the accumulated knowledge accessible. As discussed
above, the so-called Books of Knowledge or know-how database play a
key role. The fact that we are not used to managing corporate knowledge
well can become devastating in the long term. Think, for a moment, that
approximately half the people who work in the company for you now, ten
years from now will be gone: retired or elsewhere, taking with them what they
have learned. And the company will be forced to start all over, again bear-
ing the costs of learning and slowing down the real innovation of products
and processes. This happens more often than you might think, but we are
less aware of it because it is a phenomenon that is distributed over time,
ultimately slowing down innovation in the company.
The reuse of components provides significant advantages associated with
industrial purchasing strategies, with the reduction of warehouse space asso-
ciated with the lower number of part numbers to manage, in the number
of different tools required in the factory and the ability to do mixed model
production on the same line, in administrative, managerial, and technical-
productive terms. One fewer component is one fewer component that has
to be designed, ordered, purchased, manufactured, controlled, managed,
packed, etc. Saving on total cost goes far beyond the mere cost of the mate-
rial, and often has an even greater hidden cost that can magically appear
and disappear. Let’s see why.
2.8.4 Releasing Energies to Make a Real Difference

A strategy that can lead to unimaginable results in increased value to the
customer, and at the same time free up internal resources, requires a whole
new mind set: learning to focus our energies on the critical 30% of the
design activities that ensure a 90% increase in perceived value from the
point of view of the customer. In this mind set, we encounter one of the
most sensitive aspects of the development of new products: the ability to
combine standardization, discipline, and creativity. It requires profound

technical and mental discipline to be able to approximately reuse 70% of
designs that are needed for the product but not necessarily coveted by the
customer. If we manage not to concentrate too heavily on issues that are
of little importance to the customer, then we will be able to put our best
efforts into true innovations that really matter in “making a difference” to
the customer. However, if we focus our creative energy on that 30% that the
customer sees and values, applying structured innovation processes such
as Set-Based Concurrent Engineering, we drastically increase the probabil-
ity of success delivering the right product at the right time to the customer.
In so doing, we essentially release enormous pockets of energy otherwise
dispersed. The distribution of energies we are talking about is the road
that has so far been followed by companies such as Toyota, Apple, Honda,
Procter and Gamble, and Diesel, with impressive results. Think of a next-
generation iPhone and compare it with one of the previous generations.
You will notice that at least 70% of the components remain the same. Then
think about the iPhone, iPod, and iPad. Look at their operating systems,
their software, and their components: you will be impressed by the percent-
age of shared (or scaled) parts. Now also think of how many models Apple
has on the market, compared to those of their competitors. Finally, ask
yourself which company in that sector makes the most profit and who has
the largest market capitalization. The answer is obvious.
You can understand, then, what it means to run a business and really
care about the product and the customer, and what really makes the dif-
ference, while reusing knowledge and standards for everything else. This
approach has been taken by countless successful entrepreneurs who have
been able to focus their energies on the few value-added innovations that
stimulate the customer, rather than trying to do everything in an average
way.
2.9 Summary of Key Points in Chapter 2

1. Processes as a response to problems. Before providing solutions or defin-
ing any new rule or process, let’s ask ourselves what the real problem
is that we need to solve. When this is clear, we can analyze the given
process for gaps to the ideal process and identify the root cause of the
gaps, remembering that all activities in product development are bound
to each other like links in a chain.
Processes ◾ 123
2. Before starting a project, define customer needs and the business con-
straints by applying a thorough, structured process. The Concept Paper
is the document that sums up and formalizes this vital process. This
process should be done before embarking on any project activity, to
align people toward the final customer value while accounting for cor-
porate constraints.
3. Concentrate efforts at the beginning of the project in order to explore
alternatives while there is maximum ability to innovate. A key strategy
for achieving the optimum solution in the shortest possible time, with
the fewest number of modifications and iterations later in the project.
Set-Based Concurrent Engineering is a structured methodology to help
spur creativity in the early phase of the project.
4. Map processes to distinguish between waste and value-added activities.
There is no universal recipe for improvement. It is fundamental to train
yourself to recognize the principal sources of waste in your own spe-
cific working context—in product development and other intellectual
activities. Value Stream Mapping of processes leads to a greater aware-
ness of the people who will actually have to guide and effect change in
the company.
5. Get intellectual activities to flow by minimizing variation. Apply the eight
principles of flow, applicable to individuals and groups: level incom-
ing work, minimize the number of current activities, reduce the size of
activities, establish regular rhythms, plan for results and not activities, Pull
Planning, avoid becoming overloaded, and minimize interruptions.
6. Learn not to get overloaded. The ability to predict and control the level
of work in the system ensures the quality of work, respect for dead-
lines, and individual well-being over time.
7. Lean Project Management. Create the right conditions to make projects
flow, rather than concentrating on control of all the details. Become
experts in understanding the process and guiding teams to tackle prob-
lems as they arise on a project.
8. Standardization of products, processes, and competencies. Vital for
effectively utilizing scarce and valuable resources. The best-in-class
companies manage to reuse approximately 70% of existing components
when moving from an old product to a new one.
9. Maximum value with minimum effort. This strategy is complementary
to the previous one and concerns the ability to see what delivers maxi-
mum added value for the customer and channeling creative energies to
innovating products and processes that customers really want.
Resource
https://www.lenovys.com/en/case-history/frigoglass/
Notes
1. Devised by W. Edwards Deming in Japan in the 1950s. In those years, pro-
duction quality was guaranteed merely by testing stages. All post-process
inspections could achieve was to discard defective items; according to this
logic, the increase of quality would mean an increase in inspections and
therefore of costs. Waste and costs were not in tune with the concept of
quality that the Japanese wanted. So they turned to American experts,
including W. Edwards Deming, to introduce tools to ensure a gradual
improvement in quality.
2. For more on this specific issue, see the Appendix.
3. Godin S., 2010.
4. Walton M., 1999; Ward A.C., 2007; Morgan J., Liker J.K., 2006.
5. Liker J.K., Morgan J., 2011 (“Lean product development as a system: A case
study of body and stamping development at Ford.” Engineering Management
Journal, Vol. 23, No. 1, 2011, pp. 16–28.
6. Jim Womack describes the “gemba walk” as all the “strolls” in the field that are
normally done in a Lean company when we want to gain an in-depth under-
standing of a given issue.
7. Liker J.K., Franz J., The Toyota Way to Continuous Improvement, N.Y.: McGraw
Hill, 2012, chapter 11.
9. Six sigma is a methodology born in the United States at the end of the 1980s,
and was used in the 1990s by companies like Motorola, Allied Signal, and
General Electric. The stated aim is to offer products to end consumers with
the highest possible quality and lowest possible cost, by applying statistical
tools and methods that help people to measure, analyze, improve, and control
every type of process.
10. Morgan J., Liker J., 2006.
11. Richtel M., 2010.
12. Hopp W., Spearman M., 2007.
13. Loehr J., Schwartz T., 2005.
Chapter 3
People: The Engine for

Creativity at the Heart
of Long-Term Success
In business, we often think that results are achieved thanks to having chosen
the right strategy, the right product, and the right actions. But these traditional
elements of corporate governance are rarely insufficient for ensuring prosper-
ity over the long term. A winning organization on paper with a good plan of
action and performance monitoring systems can lull managers into believing
that the success of their companies is assured. But as Freddy Ballé says: “It is
not a question of machines, or of organization, or even money. It’s the people
… Leadership. It’s all a matter of leadership.” The ability to deeply engage peo-
ple, motivate them, really put them at the center of the corporate transforma-
tion process is the key factor that ensures the full sustainability of any change
in a company. In this section, we will explore some strategies to better unleash
the enormous potential of our people too often hidden in companies today.
3.1 There Can Be No Innovation without People

Go to the people. Live with them. Learn from them. Love them.
Start with what they know. Build with what they have. But with the
best leaders, when the work is done, the task accomplished, the
people will say: “ We have done this ourselves.”
Lao-Tsu
125
What stimulates innovation in a work group most of all? A fine article in

the Harvard Business Review in May 20111 reported the results of observing
hundreds of individuals including professional research groups from indus-
trial engineers to famous inventors. The most powerful leading to a high
rate of innovation in the groups was a “ sense of progress.” Based on their
conclusions, the more we become accustomed to experimenting with small
units of progress, the more the emotional side of individuals and groups are
fuelled, making them more “ creatively productive” over the long run.
This article made us think long and hard about the usual behaviors
observed inside and outside a company. What motivates people to improve
themselves, to change, to innovate?
Imagine researchers struggling with their long and tiring laboratory work,
often lacking any dramatic results. They are often working at a base salary.
What drives these researchers to move forward in their work? Or imagine
an athlete who is training hard for a competitive event, day after day, week
after week, month after month. What drives this athlete to continue?
In both cases, certainly not the things that are tangible from the outside.
Motivation often comes from a series of seemingly intangible elements,
in particular the search for and attainment of signs of progress, which at
times are really quite minor, but are enough to keep our “ internal engines”
running. For an athlete, this might mean an improvement in trial times by
a few tenths of a second, coupled with a winning vision of him or herself
in a race, even if it is months away. In the case of researchers, it might be a
small sign such as passing the alpha test in the laboratory. In both cases, the
researcher or the athlete will “ feel good” when they experience this sense of
progress. And the better they feel, the more confidence they will exude and
hence will continue to be productive in their endeavors.
3.1.1 Are Corporate Productivity and People’ s

Well-Being Compatible?
All tools for improving productivity are useless unless they are tied to
a change for the better in the emotional state of the people within the
company.
We have personally been involved in company improvement projects for
many years, as employees, managers, consultants, and entrepreneurs. From
what we have seen, when the link between productivity and individual well-
being is lacking, you cannot effectively create, let alone sustain, innovation
and continuous improvement in a company. We have seen many projects fail
People ◾ 127
and many initiatives lose their drive for this reason. As long as our compa-
nies are made up of people, it will be up to the people to ensure the suc-
cess or failure of any activity or initiative.
As a prerequisite for initiating and making projects succeed, the skillful
involvement of people is vital. This is done by bringing people on board
from the beginning of any change effort, not only to share the business rea-
sons with them, but also to listen to their individual motivations, ultimately
leading to a common view of the “ urgency for change.” Concentrating on
the welfare of the people, together with the need to increase productivity
and innovation in the business, is the only way to guarantee sustainable
structural change over the long run.
If we want our businesses to grow, we need to grow people; and growth is

not possible without well-being.
In a company, the state of well-being of its people comes from a blend

of emotions, skills, motivations, and perceptions of their everyday working
experiences. The previously mentioned results of the research conducted
by Teresa Amabile and Steven Kramer bear this out. Some behaviors on the
part of management might favor a truly virtuous cycle of improvement and
innovation, others may hinder or even discourage it.
Setting clear short-term micro-objectives, as well as a long-term vision
with broad goals focused on positively influencing customers, allows
ideas to flow within a work group and can be real “ catalysts” of progress.
Recognizing and valuing the contributions of each member of the team
while encouraging and supporting those in difficulty, can be emotional tools
that fuel the sense of progress and belonging. However, other behaviors,
have the potential to hinder progress. These include: creating unclear or
contradictory goals, taking responsibility away from the employees (micro-
managing), punishing or “ demeaning” in the case of honest errors, suppress-
ing new ideas, favoring one person’ s ideas over another’ s, showing a lack of
respect to team members, and rewarding individual achievement above team
achievement. All of these aspects can create a sense of antagonism within
the team that will clearly reduce its effectiveness.
The examples given above show the link between the external dimen-
sion of the company, comprised of facts and objective results, with the
internal dimension of people, that are comprised of motivations, emotions,
and perceptions. When we neglect to tie the two dimensions together,
we distance ourselves from that virtuous combination of productivity and

well-being.
Too often, the focus of top managers is to “ organize” better companies
and individuals, usually through structural changes on paper. If their focus
was more oriented toward creating the conditions which encourage progress
and ongoing improvement in the company, many more people would feel
a sense of success in their jobs. And, as a logical extension, there would be
greater guarantees of the company succeeding over time.
How can managers encourage a sense of progress with their team mem-
bers? Let’ s find out…
3.1.2 What Does It Mean to Become Lean?

The Principles of Lean Leadership
What does it mean, in fact, to become “ Lean” ? It does not mean introducing
some process or instrument copied from elsewhere and pasted into some
areas of your business.
Becoming Lean means creating a system that ensures the capacity for con-
tinuous autonomous improvement on the part of the people in the com-
pany, in order to raise performance in that company’ s business, forever.
An environment supporting continuous improvement makes it possible

to achieve and maintain excellence, but it also presupposes a willingness to
accept new challenges constantly. The real key to individual and corporate
success is based on the proper balance between “ technical” and “ social”
excellence.
Successful companies have been able to build a system of leadership that
can support and guide people’ s behavior, making it possible for the pro-
cesses to function.
Jeffrey Liker and Gary Convis have summarized the model of such suc-
cessful companies in four stages of development, calling it Lean Leadership.2
1. Self-Development : People must be able to continuously learn, improve,

and constantly question themselves and thus lead others by example
and with passion.
2. Develop the full potential of the team : knowing how to enhance and
stimulate the real potential of one’ s own team, guiding them not as
People ◾ 129
“ bosses,” but as “ coaches.” This means taking to heart their continuous

learning and their autonomy. Motivating and getting people involved are
key to sustainable improvements.
3. Support daily improvement to achieve results : setting up systems and
habits that can facilitate the achievement of concrete results on a daily
basis (daily management), in keeping with the spirit of continuous
improvement (kaizen).
4. Create aligned vision and objectives : to promote the solidarity of the
entire company in regard to a common vision, sharing the reasons for
the distribution of aligned and complementary objectives that are never
at odds with each other.
Promoting values and beliefs that favor a “ viral” diffusion of the same
philosophy within all personnel in the company is key to Lean Leadership.
These values incorporated as the foundation of The Toyota Way 2001 are
the spirit of challenge, the kaizen mentality, “ go and see,” teamwork, and
respect for people.3 What Liker and Convis emphasize is there is something
of a sequence to these four steps, though not in lock step order and they
can be viewed more as a constantly spinning wheel. Leaders cannot be
teachers developing others until they learn themselves. What do they need
to learn? Obviously, they need to learn some technical skills and knowl-
edge, but, in addition, they need to become expert at process improvement
to drive the organization forward. As they learn to do the work and lead to
the improvement of how the work is done, they need to learn how to teach
these skills to others, in a way that is empowering and motivating. Rother
calls these first two steps the “ improvement kata,” a set of routines for
improving things, and the “ coaching kata,” a set of routines for teaching oth-
ers the improvement kata.4 As senior leaders and middle managers learn the
skills of improving and developing others, they can drive this down to the
work group level to support daily management. Only then, the organization
is ready to achieve breakthrough objectives with all aligned toward common
objectives.
This happens at the company level in Toyota through their annual process
of strategy deployment, called in Japanese Hoshin Kanri . It also must hap-
pen in a micro-version within any development project to cascade the prod-
uct and process vision and targets to every working level so the whole team
is aligned. In advanced organizations, this includes outside organizations like
parts suppliers, equipment vendors, and dealers. Obviously, we cannot wait
to set stretch objectives for everyone to mature to a perfect state, so we need
an iterative process of developing people, setting challenging goals, coaching

people as they work toward those goals, reflecting on what happened, and
continually improving the organization, people, and products.
3.2 Coordinating and Integrating Development

through the Chief Engineer System
Leaders are people who do the right thing; managers are people
who do things right.
Warren Bennis
The loss of global responsibility is one of the less visible wastes or dysfunc-
tions often present in many companies, due to the fragmentation of deci-
sions, tasks, and roles between different people and different departments.
Much of the waste typical in the development of new products and pro-
cesses is exacerbated by the lack of a unified view of the entire project, as
well as by the lack of a clear and unambiguous responsibility for the final
product and results.
In companies that have a strong focus on the effective development of
new products, and in those which apply Lean Thinking in their develop-
ment processes, the role of the Project Manager often entails far more
pronounced responsibilities than elsewhere. At Toyota, this figure is called
the “ Chief Engineer,” and is a shrewd mix between the figures of the
Project Manager, the authoritative social leader, and the technical “ system
integrator.” The Chief Engineer, or the equivalent figures at Apple, Procter
and Gamble, and other companies becomes the real “ parent” of the new
product and is responsible for the complete product from setting the vision
and requirements to the technical and financial results. They have a clear
knowledge of the progress of their project at any stage in the product’ s
life. The Chief Engineer is responsible for guiding teams to find solutions
to technical and financial challenges and making multidisciplinary deci-
sions. This requires deep technical knowledge combined with superb
social skills.
In the development of a new product, the function of the Chief Engineer
is to “ keep it all together” from the beginning to the end of develop-
ment. With authority and leadership, this figure is able to interact with all
necessary stakeholders, asking everyone involved what is needed, at any
time. From the CEO to the team members, everyone recognizes the Chief
People ◾ 131
Figure 3.1 Organizational model for Project Leader/Chief Engineer.
Engineer to be the voice of the customer in the company, as well as the one
and only person in charge of the product.
As shown in Figure 3.1, the structure of a Lean company, usually
matrixed, is designed to ensure support for the Chief Engineer to develop
exceptional products. In addition, technical excellence is promoted in the
individual functions that have the task of developing and managing spe-
cialized knowledge within the company. The Chief Engineer, one for each
product in the company, ensures the release onto the market of the products
themselves, working right across the entire organization to “ pull” the right
resources and expertise from the functional groups to ensure the success of
their project.
Despite not having a direct hierarchical responsibility, the Chief Engineer
is the real “ glue” for the entire project, always ensuring that the focus is
on the product and the end customer without the risk of getting lost in the
details of managing the technical departments.
3.2.1 Matrix Structure?

The model shown in Figure 3.1 is a version of a matrix organizational struc-
ture, in which specialized organizational groups coexist with transversal
project leads, as in the case of the Program Manager and various department
heads. But there are some subtle, but significant differences compared to
what we more typically see in matrix organizations.
1. There is no ambiguity in role and authority between the project lead

and the functional manager, as in many matrix organizations. The
functional manager is the supervisor of the employees in that func-
tion— there is no dual authority role in a formal sense. As such, the
functional specialist’ s boss leads the career path of professional growth
and development, performance evaluation, and the allocation of tasks
and projects to be worked on for each person in their department. The
project lead, such as the Chief Engineer, is treated more like a customer
of the functional specialist’ s service, not another boss as is typical in
most matrix organizations. The functional specialists must be properly
prepared and managed by the functional boss to understand the pro-
gram requirements, become a productive member of the team, and
satisfy the customer— the chief engineer. The fact that the customer
is right cannot be applied better than to the relationship between the
technical specialist and the chief engineer. Chief engineers are not the
boss of the person, but have ultimate authority over project decisions.
2. A profound respect for the role of the Chief Engineer, quite irrespec-
tive of that person’ s formal position in the organization. This allows the
Chief Engineer to lead without invoking formal authority, and to lead
both vertically, project team members, and horizontally, executives of
other functions like sales and supply chain. To develop the track record
to earn this respect, bordering in worship, takes many years of success
starting in the trenches. Thus, inexperienced managers with great edu-
cational credentials and expertise in project management software do
not have a chance of successfully filling this role. The Chief Engineer
has the experience and credibility to be the arbiter who can facilitate
the right decisions in cases of conflict between functional groups,
bringing consensus ideally, but deciding if necessary.
3. Clarity of Direction and Roles. The Chief Engineer is clearly and
unequivocally focused on the success of the overall project, achieving
the maximum value of the final product for the customer with the mini-
mum waste for the company. On the other side, the focus of the other
functional managers is clearly oriented toward providing the specialized
technical resources and solutions to the project team to achieve their
goals. There is a very careful and deliberate process of breaking down
the goals from the overall product vision, to specific requirements, tech-
nical, business, and timing, to the specific targets for each group sup-
porting the project. Through regular meetings, at least weekly, it is clear
who is on or off target.
People ◾ 133
As mentioned in Chapter 2, the skillful integration of the parts is mainly

achieved through an informal organization process that the Japanese call
“ nemawashi,” in other words, careful management of all the micro-negoti-
ations between departments. Nemawashi literally translated uses the nature
metaphor of transplanting a tree from one place to another : it would be
impossible to transfer it from one terrain to another without taking extreme
care of the roots, and the breakage of certain parts of the tree, the charac-
teristics of the terrain etc. Similarly, there is a complex process of gaining a
degree of consensus among group members in a complex process and each
member must be carefully prepared, and their input seriously solicited, so
that ideally any formal decision in a meeting has already been agreed to by
all participants.
In The Toyota Way, Liker provides a detailed account of one of the most
famous Chief Engineers in Toyota’s history, considered by Toyota associates
in the United States to be the “Michael Jordan of Chief Engineers.” Ichiro
Suzuki was directly appointed in 1983, by then Toyota Chairman Eiji Toyoda,
to direct the launch of the Lexus brand. This brand was very soon to become
the absolute benchmark in the field of luxury cars. Suzuki occupies an impor-
tant place in the history of Toyota for having demonstrated how to guide
without commanding, but spending a great deal of time in understanding
how to remove technical, social, and motivational barriers along his path. He
was entrusted with the task of launching a car whose performance was out
of the ordinary for Toyota to compete for the first time with the top-ranked
Audi, BMW, and Mercedes models, which had control of the market at that
time. To realize how exceptional this feat was, considering that by the early
1990s, a single Lexus model had sold nearly three times the amount of the
three models in the same range sold by the competitor Mercedes,5 upwardly
repositioning the technological paradigms used to build that type of car.
There is an emblematic anecdote about the conflict Ichiro Suzuki had
with the company’ s vice president of Powertrain, a person high up in the
organization, hierarchically with more authority than him. His goal was to
break a trade-off that he noticed among Toyota competitors— the trade-off
between noise in the passenger compartment and power of the engine.
His philosophy was this yet that, so great power with a quiet ride. To do
this, he determined he needed to eliminate noise, vibration, and harshness
at the source, which required building pistons, cylinders, and other critical
machined components with tolerances that were far more precise than those
that had ever been achieved. The first time he presented his request to the
VP of Powertrain, he was literally laughed out of the office.
“ Are you crazy? We can’ t do that! You are asking us to reduce variation
in the machined parts to lower levels than the variation in the machine tools
themselves.”
The Chief Engineer, at first feeling dejected, went back to the VP and
convinced him to build a single prototype in order to accurately assess
the technical feasibility, despite the evident difficulties. The engineers who
designed the engine personally assembled the first prototype, to assess the
positive aspects and defects for themselves, and subsequently mounted it
in their largest car at the time. As they came out of test driving this car at
the test track one by one, they said they had to figure out how to make a
mass produced version of this engine. The driving experience was simply so
exciting that it unleashed a passion to meet what seemed to be an impos-
sible challenge. The Chief Engineer had to creatively lead the team past their
paradigm of “ it cannot be done” to “ how can we get this mass produced.”
There was no one brilliant idea, but rather through thousands of small
improvements, even assembling the engine in a clean room to avoid dust,
the mass production version was achieved.
Ichiro Suzuki is a testimony to the fact that the real work of a leader to
create an innovative, great product is not so much about managing bud-
get and timing, but about removing the obstacles that prevent the product
from coming into being. The fact of living slightly outside bureaucratic
constraints allows the Chief Engineers to stay focused on the things that
add value to their product, with relative flexibility and freedom, rather than
being forced to micro-manage operational constraints and organizational
details.
3.2.2 What Skills Should a Chief Engineer Have?

Generally, there are two levels of responsibility. The first level is technical,
the second one is management-related. The key competencies necessary to
be a successful Chief Engineer are listed below:
1. Technical integration of the system. The Chief Engineer’ s task is to first

clearly understand the needs of their customer and effectively com-
municate them through a formal document called the Concept Paper.
This document contains the program’ s objectives, product architecture,
performance, and desired technical specifications. Then, the skills of
a technical “ integrator” are required, in order to manage the technical
trade-offs and arbitrate technical issues among the entire development
People ◾ 135
team. The role of the technical arbiter is important, dealing with differ-
ent solutions and requests from different parts of the company, each of
which is a specific part of the product. The objective at this level is to
find the optimal solution for the customer and company.
2. Project management . The next level of responsibility is tied to monitor-
ing and achievement of the objectives of the project, including func-
tional performance, cost targets, and project deadlines. This is done
formally through project reports, Design Reviews, and Project Reviews.
Nowadays, Toyota religiously uses a “big room,” called the Obeya ,
in which key data on the progress of each functional group is visu-
ally posted. This was pioneered by Uchiyamada, chief engineer of the
first Prius (see Liker, The Toyota Way ). Beyond this, the Chief Engineer
is constantly traveling to the gemba in Japan, the local countries that
are customers of the vehicle, sales offices, manufacturing plants, and
through informally building relationships and checking the process
doing a lot of the coordination behind the scenes.
Becoming a Chief Engineer requires years of technical and management

experience in order to establish capability and credibility to lead cross-func-
tional project teams and to develop exceptional products.
3.3 Cross-Functional Cooperation to

Effectively Develop New Products
Cooperation isn’ t the absence of conflict, but a means of managing
conflict.
Deborah Tannen
While developing any product or service, harnessing the expertise of
various technical disciplines to meet the customer and company needs
requires strong integration skills and is always very demanding. But it
is absolutely vital to make successful products for the marketplace. In a
Lean development system, cross-functional integration is considered to
be essential to reduce the wastes of synchronization, unclear responsibili-
ties, excessive handoffs, and poor communication. Responsibility for the
management of the new product is always given to a person with a strong
orientation toward the product itself, the Chief Engineer, as we have men-
tioned above.
In addition, a strong project team is needed to get the product to

market. The composition of this team reflects a highly “ product-centric”
vision. Of these, the staff leader is the figure that, in the traditional cor-
porate culture, would be called “ Program Manager,” because he or she
deals with the more administrative part of the project: timelines, prod-
uct costs, budgets, etc. The more technical role of the System Integrator
is always kept separate, to ensure that all the pieces of the system are
“ glued” together, and can be carried out by the Chief Engineer. The Chief
Engineer’ s small core team members (assistants to the chief engineers,
sometimes called executive program managers) are organized around
the subsystems of the product and act as a subsystem integrator to man-
age that part of the product to completion. In addition, subsystems lead
engineers responsible for daily development decisions. Furthermore, to
core engineering team members, there are support specialists to assist
their Chief Engineer in some of the project management functions such as
tracking product cost, managing the prototype schedule, etc. The rest of
the organization supports the product team. If, for example, we need to
integrate key functions into the development of the new product, such as
marketing, quality, and purchasing, we will not have those representatives
participate directly in the product team through the entire project: the
Chief Engineer, in the moment of need, directly “ pulls” the information
that is needed each time. Certain critical roles will participate in Obeya
meetings.
While the Chief Engineer is responsible for resolving all conflicts between
departments, the heads of the other functional departments have also clear
responsibilities. What are the responsibilities of the department heads?
1. Developing the competencies of their engineers and technicians in their

own specialties.
2. Periodic reviews of the growth and performance of their employees.
3. Development and maintenance of engineering checklists which repre-
sent the know-how accumulated in their own specialties.
4. Maintaining the state-of-the-art of individual specialties.
5. Technical coordination, such as ensuring the use of common parts
across multiple products whenever possible.
6. Co-design with suppliers of components and continuously improve the
suppliers’ skills.
7. Assigning the right resources to projects to support the needs of the
various Chief Engineers.
People ◾ 137
To summarize, the Chief Engineer and their team are responsible for inte-
grating the various resources to ensure the success of the project, while the
functional departments pursue developing technical excellence and making
highly qualified people available to develop new products.
3.3.1 Who Makes the Decisions?

Most decisions are made at a “ low” level between the engineer-designer,
functional leads, and assistants to the Chief Engineer as they have the
most knowledge and information. Few issues reach the Chief Engineer,
because most conflicts are left to be resolved where the problems origi-
nated. This is a considerable cultural shift. How many times have we seen
problems arise that could have been solved at the local level instead of
making them rise up the chain of command? However, the Chief Engineer
is the one responsible for leading what was written in the Concept Paper
so major system and project-level trade-offs and decisions are man-
aged by him/her. This clear decision-making process reduces the typi-
cal delays, slow-downs, discussions, yet more discussions, and appeals
for the intervention of this or that manager. At the base of a Lean sys-
tem, there is always a high degree of trust in the skilled people with an
empowerment sufficient to ensure confidence and autonomy in the prob-
lems’ resolution.
3.3.2 What About the Other Departments Not

Strictly Related to the Product?
As for departments such as marketing, quality, and purchasing, as well as
other staff departments, after their strong involvement in providing input to
the Concept Paper in the initial phase, the Chief Engineer pulls in people
whenever needed, as well as inviting participation in periodic alignment
meetings in the Obeya.
For the development of manufactured goods, production plays a vital
role. How should it interact with the rest of the organization during the
development of new products?
In many Lean companies, there is a key liaison role between produc-
tion and design. It is called the Simultaneous Engineer . From the world of
production engineering, a group of experts working in the plant, are called
upon to participate in the subsystem development groups during product
development.
From the beginning to the end of the project, they are the people who
must represent the voice of manufacturing while coordinating the introduc-
tion of the new product into the manufacturing facility.
The Simultaneous Engineers are very experienced people, the ones most
familiar with the manufacturing issues, having already experienced and
resolved many issues firsthand. They are entrusted with the duty of not
repeating the same mistakes of the past, enriching and transmitting their
own expertise to the project teams. They also contribute to the engineering
checklists which are part of the know-how database for particular product
subsystems.
3.4 The Value of Competence

Do the ordinary in an extraordinary way.
Saint Catherine of Siena
The secret to the success of many companies often lies in the specific “ tech-
nical excellence” in their given industry that they are able to develop in
people. Look at the cases of Toyota, Apple, Google, Ferrari, Luxottica, and
Samsung where the heart of the success resides in the exceptional qual-
ity and uniqueness of their products and in the technical pride with which
engineers and developers continue to perform research to unceasingly
develop new solutions for their customers.
To develop excellent technical skills in the workforce, it might be inadvis-
able to excessively rotate personnel in different tasks. This is unusual if we
think about employment today and how much more easily people change
companies and careers than in the past. However, let’ s examine some key
concepts regarding the development of technical excellence in the company.
In general, there are two models that represent the paths of development
for a company’ s employees. Both revolve around the position of the letter
“ T.” In one case, the normal “ T” model, the employee begins in a special-
ized area and after having vertically acquired a great deal of experience, is
transferred, often as a promotion, to a different job in another part of the
company, where they begin to move horizontally, rather than vertically in
the organization. The depth and breadth along portions of their “ T” are dif-
ferent from case to case. A reasonable “ T” path can, for example, be ideal
for many managerial roles. The other model, as you can see in Figure 3.2,
can be represented by an inverted “ T” shape, where an employee starts with
People ◾ 139
Figure 3.2 Different T models for the competencies and career development.
broad path and then proceeds with developing expertise in a certain area,
as might happen for an engineer.
3.4.1 Example: The Typical Development and

Career Path of a Toyota Engineer
As discussed in Liker and Morgan’ s The Toyota Product Development System ,
Toyota heavily invests upfront and throughout an associate’ s career in devel-
oping their skills. The path of an engineer who joins, for example, the body
engineering department, begins with broad exposure and then the develop-
ment of deep technical competency over several years.
In Japan, the associate begins with a month of general training, for the
most part carried out by teachers and mentors within the company. They
then spend about three months in a manufacturing plant, as an assembly-
line operator and working with production engineers. Afterward, they spend
another three months in the sales department, in close contact with end
customers, to sell product and often to deal with their complaints. Therefore,
the first goal is to become acquainted firsthand with the two essential
customers of the fledgling engineer’ s future designs: the worker who will
assemble the product and the customer who will buy it.
These are long-term goals that require a short-term investment. In this
apparently uneconomic choice, the new employee is paid a salary of
approximately eight months before his or her real potential is ever applied.
So, what is the advantage to this? In the long term, this person is not
likely to engineer something that cannot be produced or assembled because
four months of that person’ s life have been spent realizing design choices
that do not take into account productive and logistic needs. He or she will
think deeply about how to design for the customers, because that person
has listened to their grievances and got to know them firsthand. In your
opinion, would a designer or engineer simply hired and “ thrown” into the
job of designing, have the same sensitivity? The ability to understand the
profound impact that each tiny point of a design will have in the real world?
In your opinion, will the others have the same real knowledge of the com-
pany and the market?
But that’ s not all! After the first eight months, the new engineer will
spend another four to eight months doing a “ freshman” project with a men-
tor whose task is to monitor progress and pass on experience and know-
how of the technical discipline. They then will spend some time in the
Computer-Aided Design department learning the system, so they can engi-
neer at the computer instead of passing on work to a pool of CAD experts.
The next step is “ intensive on the job training” by the mentor on their first
project. In Japan, Toyota expects engineers to go through two complete
design programs before they are considered a “ full engineer,” which means
it takes from six to eight years to be respected as an autonomous contributor
to engineering. Training continues throughout their career as they climb the
technical or managerial ladder.
The Toyota approach to developing their people clearly demonstrates the
effort and the benefits for companies that continually invest in their people
over their entire career within the company.
3.4.2 What Is the Best Way to Develop Human

Resources in Your Company?
When we talk about developing such deep technical excellence during our
seminars, many people ask if it is anachronistic to invest so much in the ini-
tial training of a person. They ask whether it is even feasible, with the strong
cost pressures we have, to “ waste” time and money this way, especially in
light of the great risk that the “ highly priced” trained person might then
leave the company. They ask if it might not be more profitable to risk less
and hire good competent people from the market and place them directly
and quickly where they are needed.
Before jumping to this solution yourself, you should consider a few fac-
tors. First, ask yourself how much it really costs to recruit highly skilled peo-
ple brought in from other companies? Can you even find them? How long
will it take to integrate them into your culture? Second, if you have people
in your company who are not adequately trained, what wastes and costs
People ◾ 141
are you incurring today? Lastly, who will bring you more value, the person
who has followed the structured path to develop their skills or the person
who has not followed it? Is it better to plan for the long-term success of your
company or try to avoid spending time and money with a small number of
people who might leave the company?
As one Japanese sensei put it:
Frustrated Executive: “ What if I invest in their training and they

leave?”
Sensei: “ What if you don’ t and they stay?”
3.4.3 Personnel that Leave and Enter into the Company

The rate of staff turnover in companies that take the approach of develop-
ing expertise with their new recruits is typically much lower. Let us try to
understand why, suggesting that it is not the Japanese culture that makes the
difference, but the value system that is put in place in a company that truly
makes the difference.
Companies achieve long-term results thanks to systems that integrate
beliefs and values, principles, philosophy, and processes, which provide the
basis for the results themselves. In our experience, this is the receipt used by
companies that have achieved exceptional results in any geographical loca-
tion and in any industry. Let us return to our new employees.
If a company invests up to three years in guided and structured training
upfront and continued development afterward, trainees receive the mes-
sage that the company believes in them, that they are so important to the
company’ s success that a serious investment is being made in their personal
development. Over time, we have seen people in these conditions pass up
opportunities for higher paying jobs, as long as they continue to be valued
and given challenging work. Historically, companies that have the lowest
turnover rates are not the ones that pay more, but those that have created
the social conditions that drive loyalty in the person. First and foremost
among these conditions are the values that the company puts into practice.
What are some of these values?
1. A belief in the value of developing and sharing knowledge.

2. A mentoring culture, the importance of having a reference point, an
internal coach, an expert who is able to provide guidance when there
are problems.
3. A culture of encouraging and rewarding personal growth.

4. A culture that continuously challenges its personnel to grow and learn.
These are just some examples that help forge the bond between the indi-
vidual and the company and grow the human and professional capabilities
within the company itself.
3.4.4 School, Apprentices, and Artists

When speaking about people development, some people ask us if it is right
that industry has almost replaced traditional schools. It is true that in compa-
nies like Denso, Toyota, and Apple, in the “ internal training classes” prefer
internal teachers to those who come from outside.
This concept reminds us of the distant past, the Italian Renaissance, when in
the artisan workshops the master blacksmith taught the apprentice, who went
into the workshop to learn from his own master or teacher. This is something
we almost never see today, even in places where it should still be a sound rule.
In our world, we have lost the culture of handing down experience. However,
Lean companies, in spite of modernization at any cost, go back and relearn the
“basics” when it is necessary, proving that true innovation can also hide behind
methods and systems which have long proved successful in ancient times. For
a company, the “craft or occupation” that originated a long time ago is know-
how accumulated over time, a mix of techniques and principles that cannot be
delegated either to school or external lecturers. The school can provide basic
knowledge and encourage the mental openness required to face the complex
world of work, but it will never replace the “craft” of the company. Together
with the techniques and principles, the values of a company cannot be taught
by others, but rather it is the company itself that should teach them and live by
them, especially their own managers.
You cannot hope to achieve certain results without first creating the right
competence to obtain them, and without running the risk of falling into the
wishful thinking typical of many people and many companies: achieving
results without the right people and processes to achieve them.
3.4.5 Superstars or Normal, but Competent People?

At the system level, this attention to the corporate standardization of high
levels of competence addresses the need for flexibility in selecting the
resources to be allocated to a project. Often, we are used to selecting the
People ◾ 143
resources to be allocated to a project by using personal judgments, sympa-

thies, relationships, and competency demonstrated in the field. All valid rea-
sons, but that can become an arbitrary process that values some people over
others. There is also the waste of time in negotiating and vying for certain
resources to be assigned to one project versus another.
At a company level, it can also cause a loss of flexibility because manag-
ers will gravitate to the same people while not giving others a chance to
grow. Over time, this leads to overburden for the “ high performers” and
a stagnation of skills for all the others as they are not given the chance to
expand their skills on more challenging projects. It leads to an imbalance of
skills across development programs depending on the network and influ-
ence of the project leader.
On the contrary, with a standardized system for developing people, the
company has more flexibility in effectively utilizing the skills of their people
on projects. In addition, the choice of the person to be included in a proj-
ect becomes more objective (and more peaceful) as people will have more
standardized skills. The Chief Engineer does not need to waste time in
vying to get the right person for each job, because they know that there is
a system that provides a level of skill and that the risks of having less expe-
rienced people are mitigated with the mentorship being done by a senior
specialist.
3.4.6 Specialists or Generalists?

Developing specialists today remains one of the few hopes for achieving
true and sustainable technical excellence. Personally, we have little faith in
those companies where one does a little of everything or where supposed
technical experts are rotated frequently to ensure they can continue to
“ progress” in their careers. It’ s like telling a good heart surgeon to change
their specialization after a few years, in order to keep their skills from stag-
nating. If you are looking for a good reliable heart surgeon, who would you
trust more, a specialist who has worked in that field for years or a generalist
who has broad exposure by changing jobs every few years?
3.5 Suppliers or Partners: Mirage or Reality?

The biggest mistake you can make is believing you can do every-
thing yourself. After a more than thirty-year career, I still dedicate a
lot of time to choose, firsthand, partners and employees, and I am

still eager to learn the things I don’ t know from others.
Renzo Rosso— founder of Diesel
This subject is increasingly debated in many companies. Today, even more
than in the past, a significant part of the value of a company’ s products is
determined by outside suppliers. For an automobile, an industrial machine,
an electronics, and many others, purchased components can be up to
75% of the final product’ s cost. Therefore, it should be unthinkable not to
apply exactly the same principles we do with our employees to our main
suppliers.
For companies with a strong innovation and frequent rapid renewal
cycles of its products, it is vital to be surrounded by technically competent
suppliers to develop and design new solutions, rather focusing solely on
production capability. These key suppliers need to be appropriately involved
in the early stages of product development through the use of appropriate
management tools, such as pre-development agreements or the use of the
supplier’ s resources located within the customer’ s company (e.g. full-time
resident engineers).
In a company that relies and focuses on innovation, strategic suppliers
are managed and trained almost the same way as internal human resources.
They are an integral part of the process of generating customer value, and
therefore requires close collaboration to be sure the right value is delivered
at the right time with the lowest total system cost. Suppliers are a natural
extension of our company, and this is the reason we should think of the
suppliers as part of our technical departments’ extended network.
3.5.1 How Should We Choose Our Supplier-Partners?

For the definition of the relationships and the strategies with suppliers, the
goal should always be to look at the total cost generated. The price of the
component is not the only cost to be considered, but all the direct and
indirect costs connected to that supplier should be taken into account. The
costs of transport, internal handling, quality defects, poor technical or pro-
duction performance, and delays in the delivery of a prototype are just a
few examples of what can be avoided by careful selection and development
of suppliers. Therefore, it is not simply a matter of assessing how much we
pay for the component that we are buying from the supplier, but of learn-
ing to truly assess all the influences that the component will have on the rest
People ◾ 145
of our company and our customers, in the design, production, and sales and
services phases of the product . In production, for example, we could have
components that we paid less for, but that lead to unforeseen costs in labor
due to logistical or quality issues; in design, we may have difficulty with a
“ low cost” supplier, who fails to give us suitable solutions for reducing the
cost of the product, or who is always late with the delivery of prototypes.
Each of these simple examples is unfortunately considered normal waste in
many companies and is often hidden in overhead costs.
3.5.2 Different Categories of Suppliers

The purchasing and integration strategies should be determined on the
basis of the impact that a supplier carries in relation to the value and costs it
generates in the final product. In this sense, we can divide the world of sup-
pliers into three categories (Figure 3.3) depending on the actual effect they
have on a business in the long run.
So-called marketplace oriented suppliers require a more basic business
relationship as they provide commodity products with relatively low value-
add in the product. In this case, we are talking about parts and components
with a secondary impact on the final product and process, easily available
everywhere, with a level of standardization that does not require special co-
design activities. In this case, the more traditional supplier relationship based
on production quality, delivery, and cost is important and the company can
leverage price and volume to minimize costs.
Figure 3.3 Categories of component suppliers.

In the middle range of suppliers are those who have a heavy impact on
the production of the product, and then on the performance of the cus-
tomer’ s production plant. Nowadays, it is important to properly evaluate the
total cost of supply, including the costs of poor quality and level of service,
the supplier’ s ability to continuously improve, and the distance from the
customer’ s factory, because, in this case, the supplier can be considered an
extension of the plant’s production capacity. This time, the selection criteria
should consider the most thorough evaluation factors, typically classifiable in
tools and processes of Vendor Ratings , that assess the overall performance
of the supplier over time, even going to the sites of the supplier to fully
evaluate their processes, management, and tools to guarantee the objectives
of the final production plant. An example of a Vendor Rating used in the
past is shown in Figure 3.4.
Finally, the third category contains those suppliers that design and
manufacture strategic parts that greatly impact the performance and/or
cost of the final product. With these providers, we must expand the cri-
teria for selection and evaluation from the prior categories. It is clearly
absurd to adopt the same criteria for a supplier of screws and a supplier
of strategic products such as circuit boards that control the major func-
tions of a product. Unfortunately, this mistake has been made by many
companies.
3.5.3 How Do I Know If It Is the Right Supplier for Me?

Choosing a supplier is always important, but when it falls into the third cat-
egory, it is necessary to pay more attention, given the real impact the choice
will have on the entire organization over the long term.
The process of selecting and “ developing” a supplier-partner in a Lean
organization is, in some ways, similar to the engineers’ one within the
company we discussed earlier in the chapter. It may take years to develop
the skills of a supplier before it becomes an integral part of the organiza-
tion. This is a process that cannot be driven solely by the final piece price
for a given project. In addition, the company’ s product development capa-
bilities and its willingness to collaborate and learn over time must fit the
company’ s needs and values. In other words, we need to consider the
technological, organizational, and management capabilities of the supplier,
as well as the cost of their products. For components in this group, it does
not matter so much where in the world the supplier is located, but that the
knowledge and the capabilities delivered can truly make the difference to my
People ◾
147
Figure 3.4 Example of Lenovys model for evaluation of key suppliers.

product and my process. There are specific factors that, in our experience,
should be evaluated before the final choice. These are not the only factors,
but they represent a useful base for understanding if you are choosing the
right supplier-partner.
1. Uniqueness . The ability to deliver components, modules, and services

with distinctive and unique features in terms of functionality, price, or
other intangibles such as styling. Generally, it is decided to try this type
of company, evaluating new concepts for a product or service not yet
offered by other partner suppliers.
2. Complementarity . The ability to integrate the supplier into our Value
Stream. This requires time to evaluate the actual performance of a new
supplier as it relates to product development, production, and product
support. It is best to start with a small, low-volume project to see if the
potential partner and the company can fit.
3. Speed . In the early stages of product development, it is vital to be
quick. The evaluation of this aspect of our suppliers is often underes-
timated. Think how important it is, for example, to quickly understand
the new technical requirements, provide multiple concepts, build and
deliver the required prototypes, carry out the required product testing,
and send the results. For critical components, this can make or break
your project timing.
4. Aptitude for improvement . During the development of any new prod-
uct, it will be impossible to avoid changes and “ adjustments” based on
learnings from testing and field evaluations of the first prototypes. A
supplier who is unable to adapt, improve, and propose fast new solu-
tions will undoubtedly create problems and delays in the development
process.
5. Willingness to invest . It is important that our budding partners have
the desire and ability to invest with us to receive greater benefits for
both, over time. This is not a purely speculative matter, but it involves
an assessment of the supplier’ s predisposition and orientation over the
long-term. In other words, do we see that our new supplier is more
interested in working with us to find the right solutions or are they
more focused on getting paid for every little change that happens dur-
ing the development? Do they spend the time to “ go and see” at their
customer’ s technical center? Do they invest time and effort in develop-
ing their own suppliers?
People ◾ 149
In order to assess the above factors, it is best to start slowly and gradually
build the relationship with a potential supplier-partner. For example, a small
project could be used to start to test their product development capabili-
ties in terms of generating innovative concepts, developing robust designs,
delivering prototypes, and testing capabilities. In addition, it could be best
to stipulate the initial contract for a small volume project so that you can
become better acquainted with each other over the long term and mitigate
risk to your company. Based on the first product cycle, the company can then
decide whether the relationship is growing as planned and continue with
more challenging and larger volume projects. As a caution, the faster a new
partner is pushed into a business, the greater the risk is of spending extra
time and money later on to remedy the situation that turned out not to be
in line with the strategies and values. Take your time to properly assess and
develop your key supplier-partners and you will come out with better prod-
ucts while reducing a lot of waste in your product development Value Stream.
3.6 Constant Learning and Continuous Improvement

There can be no knowledge without humility and willingness to
learn.
Mahatma Gandhi
The ability to learn and improve is the greatest sustainable competitive
advantage for individuals and companies. Those who know how to learn
the quickest from the market, from their own mistakes, from their com-
petitors, and from their suppliers will be more prepared to make major
gains. Those who seek to continually improve their activities, without
necessarily waiting for “ big” changes, but by taking small steps every
day, will be more inclined to achieve truly sustainable excellence in their
industry.
Tactically speaking, this can only be done in one way: it must be prac-
ticed every day in everything we do and encouraged by our management.
In Lean companies, there is an overarching belief that the full potential of
the individual and company can only be realized by developing the ability
to learn, and aim for continuous improvement, kaizen, as a personal and
professional way of life. This approach is what makes continuous corporate
growth sustainable and therefore must be felt as an important value at all
levels, from the management to the workforce.
3.6.1 Big Initiatives

A company that embraces Lean values at a deep level is not obsessed with
the big initiatives typical in many corporations. For example, six sigma or
world-class manufacturing projects, or Lean Manufacturing itself, are all too
often treated as mechanistic tools for corporate improvement and not as a
set of values and principles that can be practically applied to continuously
improve.
In some cases, these major initiatives are launched with great fan-
fare, formally structured, fully fledged, and chock-full of report outs on
improvements that have been made and the money saved. A number
of managers are giving more attention to the tool and the initial results
than the actual process of cultural change and sustainable development
of new beliefs in people. It often happens that these major initiatives
then begin sinking, more or less gradually, and people do not under-
stand why.
There might be great initiative from time to time, the so-called kaikaku
or “ radical improvement,” but it is the everyday kaizen lead by individuals
and small teams that leads to the steady sustainable improvements in world-
class companies.
3.6.2 Learning and Continuous Improvement:

Visible and Invisible Knowledge
While knowledge management is a well-discussed subject in industry and
academia, many companies struggle with it. Part of the challenge is defin-
ing what is knowledge and recognizing that it comes in different forms. One
category is explicit knowledge or more generally, “ information.” The other
is implicit or tacit knowledge , or generally, “ latent know-how.” We can find
explicit knowledge in many streams of information that flow into the com-
pany. Posters, cards, procedures, operational information, and emails are just
a few examples that represent forms of knowledge and information provided
at all levels in the company. It is easily codified into the form of facts, idi-
omatic phrases, and is transferable without much loss in the transmission.
Sometimes it makes us smile to see the pictures framed and hung on the
walls of the offices in which the company’ s Vision and Mission statements
are prominently displayed. Often, it is a good example of explicit knowl-
edge, but a bad example of tacit knowledge, when they do not line up with
the real corporate culture and values experienced in the company. And in
People ◾ 151
many cases, we see that many people do not even remember what is writ-
ten in those framed pictures.
The more difficult knowledge to share is the tacit knowledge. It is knowl-
edge that is not transferred in simple, linear ways. In fact, it is sometimes
difficult to draw out. “ We know it exists,” but we cannot always see it. It
often happens in the company that we know things about a number of top-
ics, many details, and a great deal of information that is not however cap-
tured anywhere. We sometimes know who has that precious information
and where to find it. If we don’ t, it can take time to find it or, worse, we
move on without it and repeat the same mistakes. This confirms the fact that
the layered knowledge built up over the years in people and in the company
is not only complex and deeper than we might believe, but it is also difficult
to transfer because it requires close ties between people and a lot of time to
learn. When someone is able to decipher, organize, and share this type of
knowledge, a true strategic competitive advantage can be clearly gained by
the company.
3.6.3 Making the Intangible Tangible

Every time we create the right conditions for hidden know-how to
emerge and make it available to colleagues, several positive things hap-
pen. Through this passage of conceptual transformation, both the person
who possesses the information and the person receiving it are enriched.
Consequently, this helps to enhance the business’ s learning culture, which,
even if it is so difficult to measure, it is so strategic to determining success
over the long run.
Several methods and tools can be used to capture, share, and further
grow tacit knowledge both within and outside of the company. Some exam-
ples seen at companies such as Toyota include:
Supplier know-how exchanges. Through regular and structured sessions
of technology “ demonstrations” in areas of interest organised by suppliers,
it is possible to share new concepts, technologies, and tools in a structured
way. This provides access to new ideas, due to having a view of new solu-
tions that are just outside the borders of the company. Companies can also
broaden this approach by exchanges with other companies or institutions in
other industries to gain new and innovative knowledge.
Benchmarking: internally and external competition. The benchmarking
phase that in technical jargon is called the teardown , a competitor’ s product
is taken apart piece by piece, in order to learn from it, quantify the costs,
decode the production technology used and study everything that can be
gleaned by dismantling the product.
When there are no physical products, a great deal can be learned from
the services offered by the competition about their strengths and weak-
nesses, or about how to run similar activities in our own companies. This
same activity can be extended to the internal aspect of your business.
There are often situations where three or four people from the same com-
pany theoretically do the same thing, but in reality, no one knows what
the other does, either because they are in different offices or countries or
because they simply do not have the habit of making comparisons to learn
from each other.
It is not unusual to see two or more people doing more or less the same
thing in a large company, but obtaining different results. In these cases, it is
useful to have systematic comparisons so that the best methods can be stan-
dardized and shared to all.
On the other hand, avoid the “ copying blindly” trap. Even what seems
to be a straightforward “ best practice” often works within the context you
are observing based on the leadership, skills, and culture, or the technical
process. Blindly copying also kills creativity. The spirit of kaizen is to always
try to improve on what you see others do when solving your own internal
problems.
Know-how database. Already addressed in a prior section of the book,
the know-how database represents a great container of information, and
is designed to make access to information easier and more intuitive when
needed. All relevant information related to products, processes, guidelines,
available checklists, the test results, the performance of existing and new
projects, and lessons learned from the past will find a place here. In this
case too, however, we always put people on their guard from becoming
enamored with the tool rather than the content and especially the process of
updating and effective use of the knowledge within it. It is never the bril-
liant IT solution alone that makes a difference, but the dense network of
collaborations and healthy habits that are created around the tools that make
the difference.
Problem-solving and A3 Reports focused on learning. Through this type
of process, which will be analyzed in detail in the next chapter, a double
objective is pursued. On one side, there is the objective of having a stan-
dardized method for resolving company problems. On the other hand, there
is the objective of capturing the learning on a single A3 page.
People ◾ 153
Conferences and meetings of project managers and functional manag-

ers. Through periodical meetings, once or twice a year, for example, proj-
ect leaders and managers from different parts of the company can meet to
discuss what they have learned from their projects, to compare different
implementation methods, and establish any new agreed-upon management
standards.
Special Projects Teams. These are cross-functional teams that can do
analysis and improvement projects on a specific topic, such as the decision
to adopt a new CAD-CAM design tool in the company, or to enter into a
particular business, or a new management software, or to explore a new
technology that has never been used before. These working groups could
even break away from daily activities for several months to focus on the new
project. Toyota also has a special category of “ business revolution teams.”
Prius began in a business revolution team.
Skills matrices and career paths for growth. The paths of growth in a
Lean company are always a mix of classroom training and on the job train-
ing, where the role of the mentor is often covered by one’ s own boss and
promotion paths depend on developing and demonstrating the skills. A skills
matrix can be used to visually show the skills acquired and the gaps in
learning for the employee to help them develop expertise over time.
Resident Engineers. Exchanges between suppliers and the company can
facilitate integration during the development of complex products and can
help to promote the standardization of methods and tools used by both the
supplier and customer. Over the long-term, it can also assist in transferring
tacit knowledge between organizations.
Hansei. These are moments of structured reflection, simple but very
effective. Given its importance to the Lean enterprise, we have devoted
Section 4.4 to cover it in more detail.
Summary of KeyPoints in Chapter 3

1. Jointly sustain productivity and well-being . At the heart of a company’ s
success is the capacity to involve people deeply, touching on both the
emotional, intangible sphere and the rational, tangible one, in the path
of innovation and continuous improvement.
2. Lean Leadership as a model to guide behavior . Individuals need the pas-
sion to self-develop leadership skills which are both technical and social
skills for executing and improving processes. Self-developing leaders

then develop others who ultimately lead small work groups in daily
kaizen. A well-developed hierarchy of leaders who know how to lead
improvement can achieve astonishing aligned objectives. Organizational
learning as the cornerstone for the systematic improvement of the entire
company.
3. Ensure a unified vision for the development of new products by choosing
strong Project Leaders . This strategy aims to eliminate waste from hand-
offs up and down the leadership chain, lack of synchronization, poor
understanding of customer needs, and other transactional wastes during
the development and launch of new products. The Project Leader (Chief
Engineer) becomes the real “ parent” of the project.
4. Balance technical competency with cross-functional skills in the
company . This strategy is important in order to enable growth and
excellence in it s own sector, without losing sight of the customer
requirements of products and processes necessary for an effective
launch of products in the marketplace.
5. The value of developing deep technical competency. In a world where
everyone seems to try to do everything, knowing how to cultivate top-
flight expertise guarantees the ability to design robust products and
processes that distinguish themselves from the competition. Remember
that the design process influences up to 70% of the entire cost of the
product.
6. Distinguish the different categories of suppliers and choose development
partners wisely. A large part of the value of our products is now “ pos-
sessed” by our suppliers. It is strategic to ensure we are flanked by
the right partners, capable of increasing the value of our products and
services.
7. The culture of organizational learning and continuous improvement.
Know how to value the invisible knowledge residing in our people and
suppliers through processes and tools designed to continually help our
company grow.
Resource
https://www.lenovys.com/en/blog/emotional-energy/
People ◾ 155
Notes
1. Kramer S.J., Amabile T.M., 2011.
2. Liker J.K., Convis G., 2012. The Toyota Way to Lean Leadership , McGraw-Hill.
3. The Toyota Way 2001 , Internal Document, Toyota Motor Corporation, Nagoya,
Japan.
4. Rother, M., 2009. Toyota Kata: Managing People for Improvement, Adaptiveness
and Superior Results, N.Y.: McGraw Hill.
Chapter 4
Tools for a Lean and

Innovative Company
We have emphasized that tools alone do not make great product or

process development. Tools do not innovate. Yet tools can be a key
enabler. When we think of engineering tools, we often think of sophis-
ticated computer technology for visualization and analysis like solid
modeling, rapid prototyping, virtual caves to view the product in 3D,
product life cycle management, and the list goes on. These are all
remarkable tools, but ultimately they only become remarkable through
the creative minds of people. Since computer tools are richly described
in many outlets, in this section of the book, we will intentionally focus
on simpler tools aimed at enhancing creativity and teamwork; pragmatic
tools, which are easy to use but capable of making a profound impact
on the performance of product development. In our view, if the organi-
zation is incapable of timely design of products and processes that add
tremendous value to the customer and provide a competitive edge to
the company without dazzling technological tools, the tools themselves
will not make a material difference. The tools of an innovative company
motivated to achieving superior results with less effort are often simple,
correctly sized, and, above all, supporting of their people and processes.
These tools are viewed as performance accelerators rather than as tech-
nological “ anchors” with which processes and people must necessarily
comply.
157
4.1 Criteria for Choosing the Right Tools

The way to build a complex system that works is to build it from
very simple systems that work.
Kevin Kelly
Nowadays, it is possible to purchase technology and software applications
just like our closest competitor, but this will rarely offer the guarantee of
obtaining superior results. Why? The secret is not in the individual tool, but
in the ability to adapt it to our own processes and people, customizing it
and integrating it into our company’ s systems so that it becomes unique
in the way it is effectively used. In many businesses, there is a tendency
to hope that the tool of the moment, for example, an innovative piece of
software, will drastically improve performance in the sector for which it
is designed. In fact, when buying such tools, the questions most typically
asked are: How will this software add to our productivity? How can we
justify the purchase? How much money will it save us? How can we obtain
the maximum from this new technology, spending as little as possible? How
many people can it replace? After the purchase of the “ latest and greatest” it
is realized that a lot of work is required to modify our processes to obtain
the maximum from the new technology.
A Lean company has done a lot of work before even considering the new
technology. They know that trying to automate a poor process with disen-
gaged people will have a negative effect.
Bill Gates once said:
The first rule of any technology used in a business is that automa-

tion applied to an efficient operation will magnify the efficiency.
The second is that automation applied to an inefficient operation
will magnify the inefficiency.
This explains why Lean companies invest so much time in the selection
and subsequent customization of software before making it operative. The
reigning conviction is that efficient processes and well-developed people can
only be helped, never replaced, by tools, in their ongoing journey of continu-
ous improvement.
In our view, the enormous amount of time spent by many companies
to get new tools, often bought with undue haste, implement them and run
Tools for a Lean and Innovative Company ◾ 159
them should make us all reflect. To help us avoid the pitfalls, a few criteria
should be considered prior to adopting any new tool or technology.
1. Integration and ease of use;

2. Support of processes;
3. Support people;
4. Reinforce standardization;
5. Enable organizational alignment;
6. Assist organizational learning.
4.1.1 Criteria 1: Integration and Ease of Use

It is always important to ask ourselves if the technology can be easily inte-
grated into our existing processes and systems. Does it interface readily with
them? Is it easily accessible to those who will need it? This will facilitate its
use by ensuring a reduction in time wasted as a result of having to search for
information or changeover between systems on one’s own workstation. Think
how many software packages that an engineer might use during the develop-
ment of a new product. These might include software for CAD, simulation,
product releases, product standards, change orders, cost estimating, and proj-
ect management just to name a few. Thinking ahead about the time of the
people who will need to use the tools will help us to reduce at the beginning
many kinds of waste that only become clear after the implementation.
In many Lean companies, simple tools and complex software coexist in
single integrated platforms designed to simplify access and guarantee maxi-
mum facility of use.
In Figure 4.1 you will find an example taken from one of our Lean
Product and Process Development projects: you can see how the accessibil-
ity of the various tools that can be used for the development of a new prod-
uct for each phase of a development project has been granted. Many tools
have been already discussed in prior chapters and others will be discussed
later in this chapter. Many of them are simple, non-technological tools which
can provide great value in each phase in which they are used.
Often, we carry out full-blown “ clean-up” operations of the dozens of
tools, big and small, that proliferate the company. It invariably turns out that
several are already in use in the company, and just require some optimiza-
tion, a little standardization, and integration with other existing tools. Others
may be missing altogether, but in this case, they are introduced with great
Figure 4.1 Example of a Product Development Tool Box integrated into the systems
of a company.
care, following the six criteria described in this chapter so that they become
an effective part of the product development system.
4.1.2 Criteria 2: Support of Processes

Technology must support the process, not control it. Sometimes we are
attracted by the sirens of consultants and salespeople anxious to sell us the
latest technology “ solution” in order to not remain behind the times. But the
following two aspects should be considered very carefully.
1. Nowadays, thechnology evolves much faster than the processes them-

selves. Today’ s state-of-the-art will be superseded tomorrow. We could
renew all the tools and software in a company every year, but whether
it is really worth doing it is doubtful.
2. Every time a process is changed in order to pursue a new technol-
ogy, we can encounter instability, confusion among the people
involved, and wasted time and resources. For this reason, it is advis-
able to seriously evaluate the impact (total cost and time) of introduc-
ing any new tool, and usually try a pilot before spreading the tool
broadly.
This does not mean that we should not exploit the opportunities offered
by technology. Quite the opposite. It means that it might be worth shifting
our focus onto the result we want to obtain with the tool, rather than focus-
ing on the tool itself.
If the same result can be obtained with a simpler or even an already

existing tool, with a lot less effort, why waste precious energy? Among many
possible examples, one that springs to mind is the use of tools for planning
and managing projects. Sometimes people opt for complex computer tools,
ranging from elaborate spreadsheet files to specialized project management
software, even in cases where the result could be achieved much more
effectively and with much less effort with simpler methods like the visual
management tools described in Section 4.2.
4.1.3 Criteria 3: Support People

In a company guided by the talent and technical competence of its people,
technology should be at their service, so as to maximize their value and that
talent, while reducing wasted time.
Tools and technology can never replace human competencies, but they
can enable people to do more. Often, a lot of reworking in the development
of products and processes is due to a lack of synchronization between the
people’s activities in different departments.
An example of this could be the following one. An engineer changes
something in their design, which has an impact on a piece of production
equipment or on another person’ s design, but due to the absence of systems
capable of ensuring other colleagues are rapidly informed of the change,
it becomes unobserved, only then to require corrective solutions later on,
which causes inefficiency and reworking.
On the other hand, a CAD system really designed to support people
is based on a parametric design software, so that every time a design is
modified, the users of all the other designs connected with it are informed.
Colleagues are alerted in real time with color codes about the modification
made. This enables a waste reduction due to synchronization and avoidable
repetition of activities.
4.1.4 Criteria 4: Reinforce Standardization

On various occasions in this book, we have seen that one of the principles
of Lean Thinking is standardization. This principle should apply even to the
tools that are used, both to verify that they are coherent and integrated with
other existing systems, and to genuinely support the company’ s efforts of
standardization of products, competencies, and processes. Design tools, for
instance, should enhance ease of use and sharing within and outside the
company, when we collaborate with the resources of suppliers for certain

technical activities. For example, we can adopt tools that favor technical stan-
dardization, as in case of tools that rapidly find common parts, so an engi-
neer can reuse the knowledge rather than create a new part from scratch.
Other tools can favor the standardization of processes, as in all cases
where “ process standards” are created. This development of tools can pro-
mote standardization of methods ensuring more consistent results and lead-
ing towards a common standard that stimulates continuous improvement.
4.1.5 Criteria 5: Enable Organizational Alignment

An important element of any project and organization is to have shared
goals and an aligned vision. When these are missing, there will inevitably
be enormous amounts of waste deriving from poor communication and a
proliferation in the number of different directions taken by individual peo-
ple. Tools should be clearly evaluated to ensure this does not happen. Some
Lean tools and techniques that can help greatly in the process of alignment
include:
1. Concept Paper. As presented in detail in Section 2.2, in our view, it is

an indispensable tool for defining, aligning and structuring a successful
project.
2. Hoshin Kanri. This is a tool that supports the elaboration and sharing
of the company’ s strategy. It is sometimes called Strategy Deployment.
The tool in itself is a simple sheet of A3 paper, on which the following
aspects of the company’ s strategy are cogently summarized and linked
together:
a. The company’ s strategic goals.
b. The tactical objectives of the year in progress, with a quantification
of expected results
c. The projects necessary to obtain the expected results
d. The operative processes and key indicators which allow progress to
be monitored
e. The responsibilities of the individual people involved for each of the
projects and objectives
Generally drawn up every year in Lean companies, this process ensures
a strong sharing of goals and overall vision. It is conducted in a “ cas-
cade” at the different hierarchical levels of the company and across
functions. Personally, we adore this tool, because it can be used by
any size organization from a small entrepreneur to the large multina-

tional. Several companies including Toyota, Ford, Intel, and Proctor and
Gamble use this approach.
3. Obeya System. We will examine this tool in more detail in Section 4.2.
It ensures better alignment and communication between people during
a project by making the project’ s goals and activities more visible.
4.1.6 Criteria 6: Assist Organizational Learning

Many businesses spend a lot of money on Knowledge Management tools,
enormous on-line databases that are the state-of-the-art in terms of hardware
and software. But despite the massive investments, many continue to have
serious difficulties in making organizational learning a genuine and solid
source of competitive advantage over rival firms. As discussed in Section
3.6, a key strategic lever in a company consists of its tacit knowledge, the
profound know-how possessed by the people working in the company, and
their ability to share and re-use it.
When the tool is pursued more than the people involved and processes
implemented, the return on investment of these tools in terms of knowledge
sharing is quite low. On the contrary, the focus should be on tools that help
companies to change the way they work in order to bring out of the people
the submerged tacit knowledge.
Below are some examples of tools that can effectively support organiza-
tional learning.
1. Hansei. We will cover this in detail in Section 4.4. A simple but very
powerful organizational and social tool, used to support individuals and
working groups in learning and continuous improvement.
2. A3 Report . We will look at this in detail in Section 4.3. It is a tool which
is emblematic of the whole Lean organization, because it embraces a
number of principles at the same time.
3. Know-how database/Engineering Checklists . Already mentioned in
Section 2.8, this is a system that gathers together and makes available
to everyone the layers of knowledge about products and processes that
exist in a company. In a Lean business, this database is always built and
maintained by the users themselves, who transmit and update the fruits
of their knowledge. Subdivision into specific sections helps people to
find and reuse the knowledge such as standards, guidelines, manufac-
turing processes, lists of common parts, etc.
4. Evaluation Matrix . This can be used for decision-making during the

development of a product or process such as during the Set-Based
Concurrent Engineering process. We will see how such matrixes are
used in various case studies presented in Chapter 5.
5. Single-Point Lessons(SPL). In classic “ A3” style, this involves condensing
in a page a very specific topic to teach in any given area of a company.
The goal is to reduce the time required to understand the content, using
images more than words, and focusing on clear, succinct, and effective
messages. Generally, SPLs are positioned near points where they can be
useful, such as offices and production plants.
6. SOP (Standard Operating Procedure). A tool that helps to standardize
all the processes used in a business: this is a Lean version of traditional
procedures. The difference is in the type of processes represented, the
aim being to eliminate waste, and in the way they are represented, with
the objective of being easy to understand and accessible to anyone who
needs them. This tool, therefore, has a dual function: standardization
and organizational learning.
4.2 The Obeya

To make yourself understood to the people one must first speak to
their eyes.
Napoleon
One of the fundamental instruments used in the management of Lean
Innovation projects is the Obeya. “ Obeya” is a Japanese word meaning
“ big room,” and it became a common word of the Lean lexicon after Chief
Engineer Takeshi Uchiyamada introduced it at the end of the 1990s to indi-
cate the method of communication and alignment adopted in the project for
the new Toyota Prius. With this method, Uchiyamada managed to reduce
the time it took for various team members involved in the project to high-
light issues and communicate with each other. This helped to avoid the
typical errors arising from a lack of alignment between goals, priorities, and
technical decisions that needed to be made by the work team.
Results were so surprising that Toyota universally adopted the same
method, after further refinement and standardization, to all subsequent
projects. Methods similar to the Obeya room can also be found in the West.
In some cases, they are similar to the Anglo-American-style “ war rooms.”
What they have in common is that they display the information relevant to
the project to every member of the team, besides creating a private, focused
working environment where it is possible to optimally integrate different
resources to solve problems more quickly.
After having analyzed the Japanese Obeya method and comparing it to
other types of rooms used in Western Europe and the United States, we have
seen several very good elements which are discussed in the following sections.
4.2.1 The Effectiveness of Different Means of Communication

When we interact with other people, our cerebral activity increases in rela-
tion to the degree to which its “ communication systems” and the senses are
activated simultaneously. As you can see in Figure 4.2, cerebral activation
increases according to the type of communication technique we use. When
we have to align ourselves with a group of people, emails are the poorest
method, because they are one-directional. There is no scope for immediate
engagement and clarification with our addressee. We cannot explain all the
details in the body of an email without becoming long-winded and inef-
ficient, so it is not always clear what the recipient has understood. Often,
we receive unclear, late, or worst of all no feedback, leading to uncertainty
of genuine alignment among all stakeholders. In addition, of course, there
is the basic drawback of not being able to see with our own eyes the real
reactions of the people we are sending the email to. The telephone is more
immediate and effective than email, but it is still a “ poor” communicative
tool for the purposes of alignment within a team, because it is not possible
Figure 4.2 Variations in cerebral activation according to the communicative tool.

to see our teammates or to know if they are truly listening or multitask-

ing during the conference call. In face-to-face dialogue, on the other hand,
things improve greatly, because there is enormous potential for making
alignments easily thanks to direct communication. However, we often have
face-to-face discussions with a limited number of people at a time.
With the Obeya approach, we can achieve maximum effectiveness,
because it combines the advantages of direct dialogue with the support of a
systematic method designed specifically to optimize the entire flow of dia-
logue within the whole team. With the support of the various physical and
visual media available in the room, we are able to gain maximum commu-
nication and alignment in a short period of time. Let’ s look at the method in
more detail, because it contains many invaluable ideas that can be applied
to any kind of project.
4.2.2 The Importance of Distances

I will start with the importance of communication in an R & D project, and
the key factors that can enhance it. Project performance depends directly on
the quality of the communication between all the members of the project
itself. But the quality of communication depends on the physical distance
between the different team members, as was demonstrated back in the pre-
internet era in important research conducted at the MIT by Thomas Allen
and Alan Fusfeld.1
This may appear to be an obvious conclusion, but when we observe the
real physical conditions in which teams operate or the real spatiotemporal
distances between various people in a project’ s today, we realize that only
very rarely are projects organized to favor rapid communication from the
beginning, through the elimination of the physical distance among team
members. The Obeya is realized taking this concept into consideration. It
is a shared space, with a number of “communication accelerators.” They are
useful for obtaining maximum performance, combining processes and new
habits through simple visual tools, designed to support the whole project.
The goals of this system are the following ones:
◾ Guide and accelerate the flow of the project through the product devel-
opment Value Stream.
◾ Improve communication and collaboration between all the people
involved.
◾ Quickly highlight the issues (it is the “ andon system” of the project).
◾ Speed up team-based problem-solving.

◾ Standardize communication within the project team.
◾ Minimize and simplify reporting to stakeholders.
◾ Converge toward (and increase) the level of satisfaction of external and
internal customers.
The Obeya room becomes a kind of “ home-room” where the team can
meet, work, and share information: the Chief Engineer, or Project Leader,
is generally based in the Obeya room for the duration of the project and
meets his or her team members on a regular basis over there. All the team
meetings and key activities take place in the Obeya. Meetings with suppliers
and customers can also held in the Obeya room, unless there is a specific
need for confidentiality. All the information (technical, financial, schedul-
ing, etc.) concerning the project is displayed in the room and it reflects the
information contained in the Concept Paper, in order to keep the focus on
the project goals. Meetings generally take place standing up, with the project
leader and team members walking the walls of the room, discussing issues
and exceptions of the project on the given day.
4.2.3 Setting Up an Obeya Room

The Obeya is structured according to a shared idea of the team on how to
organize the given space. Figure 4.3 shows an example of a basic layout
adopted by one of the many teams we have worked with in recent years.
Each team establishes its own standards to satisfy the project requirements,
and the structure and layout of the room itself evolve along with the project.
Each subgroup of the team has its own section of the room, and is respon-
sible for keeping its content constantly up-to-date.
The system is designed to facilitate the application of other principles dis-
cussed in previous sections of this book. For instance, we have described on
various occasions the negative effect of wanting to do too many activities all
at once. We can see how the Obeya can help us. If we look at the example
illustrated in Figure 4.4, the Obeya has already been designed with this kind
of problem in mind, and there is a special section devoted to this week’ s
issues, in order to focus the team’ s attention on the few critical problems
that need to be solved now, without having on the table more problems
than can be actually addressed. Repeating this method, the team gradually
trains itself to tackle and solve only a few problems at a time. This visualiza-
tion of small batches of work helps to focus on the scarce resources of the
Figure 4.3 Example of a layout design for an Obeya room.
Figure 4.4 Example of subsections in an Obeya room.
team and helps the project to gain speed. In Figure 4.4, you can also see a
section devoted to the visual representation of the main parts of the Concept
Paper: goals, key milestones and planning, team, must, must not, nice to
have— everything needed to keep the team focused on what is value-added
to the customer from the start to the end.
4.2.4 Seeing for Yourself

Besides the tangible visualization of data, documents, and work plans, the
Obeya room is often used as a place where concrete things can be seen
first-hand, instead of having to describe and interpret them, often badly. In
other words, an effective Obeya is not just a room full of indicators but it
rather helps to visualize not only the project but also the product. In one of
our projects, the production manager had spent several weeks trying in vain
to explain to a designer the non-feasibility of a technical solution produced
according to given specifications. This was slowing down the whole project.
The suggestion to quickly build a mockup and organize a meeting in the
Obeya resolved the matter in a few days, because the engineers were able
to “ see” the issue better and propose a change even before the meeting got
underway. The communicative force of physical objects, visual displays, and
real contact is so strong in comparison with all other forms of virtual com-
munication that, through the Obeya method, we try to extend this approach
to every possible issue during a project.
Figure 4.5 shows part of an actual Obeya space in action. At the
end, simplicity is the key to a successful Obeya. It is not a question
of fancy big rooms with the latest gadgets to impress management.
Often, moveable panels with sticky notes that can easily be modified
Figure 4.5 Two real cases of an Obeya room.

and shifted around as the project progresses are sufficient. In fact, this
approach is more flexible than other technological solutions and it is
very cheap!
In the example in Figure 4.5, you can see that project plans and activities
were not produced with traditional Project Management tools, even though
it was a complex project lasting almost eighteen months. In fact, the team
decided to use a quarterly macro plan of activities combined with a detailed
ten-day plan, both with large sheets of paper and colored sticky notes to
manage their activities and issues.
In the example of Figure 4.5, we can also see another simple but
very important Lean tool, the A3 Report, to help us solve problems once
they have been identified in Obeya. We will discuss A3 in the following
section.
For particularly innovative projects, it is difficult to predict exactly
what will happen over a long period of time. So, rather than wasting
time trying to work out the details of lots of activities that are difficult
to predict with accuracy, it is preferable to fix key future appointments
and look with greater attention at short-term activities, periods, using
simple, flexible tools such as whiteboards, sheets of paper, and sticky
notes.
In fact, for some projects, each team member receives five sticky notes
by the Program Manager, to identify the main activities to do in the upcom-
ing period (e.g. the “ Top 5” mission critical items for this month). After hav-
ing negotiated and reached agreement on the activities, the sticky notes are
placed on the shared board. After that, they are constantly monitored with
red or green color coding to indicate their current status during the month.
At the end of the month, the process repeats itself.
Visuals are easy to modify, simple and tactile. They are more than
sufficient for the purposes of most projects— this is a further confirmation
that it is not the tool we use that determines the success of a team. On the
contrary, it is the process that is used in Obeya in conjunction with the high
degree of engagement of the team members that leads to superior results.
And paradoxically, the more complex the project, the greater the benefits.
4.3 Simplify Communication and Learning with A3

It’ s better to say little but well rather than a lot but badly.
Anonymous
Imagine how you would feel if you were asked to report on a complex
technical challenge, or a status on a large project, or actions being done
to resolve a difficult problem, and then you were told that it had to fit in
the analysis on a single sheet of paper. Well, this is the essence of Lean
Thinking: making the effort to filter and refine your thoughts so they fit onto
a single sheet of paper so that anyone who is affected by the particular sub-
ject can find their answers just by reading that one sheet. In the Lean termi-
nology, this sheet is now universally known as the “ A3 Report.”
A3 Reports are a key tool both in the process of communication during
projects and in the process of continual learning. For this reason, it can be
used in a variety of ways: when we want to communicate the current status
of a project, when we want to prepare a proposal for a new opportunity,
and when we want to work to solve a problem.
In every case, the true effort that needs to be made is to try to think
and represent the topic on a single sheet of A3 paper. Constraining the
author to go to the heart of matters, using only the data, facts, and fig-
ures to represent the core of the issue, drives a real mental discipline,
unlike other tools. Getting everything into one page forces us to be
effective in what we think, say, and write, and to make a methodical
effort before communicating things to others. For example, arriving at a
meeting that has been called to solve a problem or examine the state of
progress of a project with an A3 report already drafted up saves lots of
time for all the participants and gives them in advance many answers to
questions that would crop up in the meeting itself. The meeting can thus
move on to a higher level of resolving issues and making sound decisions
as a team.
Figure 4.6 illustrates a template of an A3 report used for Problem-Solving.
An A3 Problem Solving Report is used when there is a plan, objective, or
standard that is not being achieved. Readers with experience in the automo-
bile manufacturing industry will probably have seen a similar model called
“ 8D,” which originated in Ford, or other similar models.
Sometimes we have seen these “ one-page reports” used just because
people were “ forced” to do so by the customers or by their boss, and not
because it is really part of the culture of learning and continuous improve-
ment. Once again, it is not the document itself that makes the difference, but
the process that lies behind it. The A3 Problem Solving Report is structured
in logical steps, to be followed one by one, in order to avoid jumping to the
conclusions, as often happens, before having clearly understood what has
happened and why it has happened.
Figure 4.6 Example of a model for an A3 Problem Solving Report.
Every A3 Report always has a single author who is the owner of the
process, and the date of the last update. The starting point is the descrip-
tion of the issue encountered and the clear definition of the problem. The
first step is to try to gather data and facts for a thorough description of
the problem itself, because expressing the problem well is often already
part of the solution. The current situation is defined as a standard that has
not been met. The extent of the problem is described together with the
importance for the company to solve it. After having described the prob-
lem thoroughly, the next step is to set the objective in measurable terms.
This will involve defining what we want to achieve: what, how much, by
when, and how to measure it. The following step moves on to analysis
and reasearch of the root cause of the stated problem. Classic problem-
solving tools can be used here, such as the “ 5 whys,” the Fishbone dia-
grams, and more advanced tools in the case of particularly complex
problems.
Consequently, the countermeasures will be worked out in relation to the
root cause found. In some cases, we may organize alternative countermea-
sures and evaluate them carefully before making a final choice; in other
cases, we may need to have short-term containment measures to meet a
pressing customer need and then implement long-term countermeasures in a
later phase. After that, there is implementation and the related plan of actions
to put the countermeasure(s) in place. Last but not least, in the follow-up sec-
tion, we will check the effectiveness of the countermeasure versus the objec-
tive and act accordingly (e.g. act or adjust). Below in Figure 4.7, we see an
example of an A3 Problem Solving report that is in the implementation phase.
When combined with the Obeya, the A3 Report plays an effective role in
mechanisms of alignment and sharing, because it speeds up the comprehen-
sion and resolution of technical and management problems, and permits the
clear communication of proposals arriving from various involved parties. At the
same time, it virtually eliminates the need for complex presentations and end-
less wordsmithing of reports. A3’s displayed together with other materials in a
given section of the Obeya adds clarity to how issues are being addressed (see
Figure 4.8) driving more discussion and input from team members.
Finally, the A3 Report is not only a tool for disciplined thought and an
effective means of communication, but it also becomes a fantastic tool for
continual learning: with a single sheet of paper we can teach, in a very rapid
and concise way, the problem we have solved to our peers.
In Figure 4.9 we see the typical structure of an A3 Proposal Story. This
is used when we do not have a plan or goal, but we want to propose a
Figure 4.7 Real example of an A3 Problem Solving Report.

Figure 4.8 Example of an A3 Report into the Obeya System in one of our projects.
Figure 4.9 Example of an A3 Proposal Story Report.

new initiative, or when a plan or objective existed, but circumstances have

changed and a new direction is required.
Other templates can be drawn up using the same criteria and the same
basic philosophy. Learning to produce good A3 Reports takes no more than
a couple of hours of initial training, but becoming excellent problem-solvers
and communicators using them involves a lot of time and a lot of practice
alongside someone who has deep experience in using this tool. Once again,
the secret of mastering A3 thinking depends more on solid mentoring than
on the simple tool itself.
4.3.1 Summary of the Basic Principles of an A3 Report

1. Discipline of thought . Applying a standard methodology even when
dealing with unfamiliar problems helps us to be more focused and
effective.
2. Effective communication . Preparing an A3 Report beforehand helps us
to drastically reduce the amount of time spent explaining, looking for
data, and interpreting issues with others, especially during meetings.
3. Tool for continual teaching and learning . The A3 report can be used to
train and mentor others and to ensure that valuable accumulated knowl-
edge is shared.
4.4 Systematic Reflection in Order to

Learn from Experience
A pessimist sees the difficulty in every opportunity; an optimist
sees the opportunity in every difficulty.
Winston Churchill
A key concept in Japanese culture is hansei, which literally translated means
“ self-reflection.” Its meaning relates to the idea of understanding the reasons
for errors made in the past in order to improve in the future. In a business
context, they are simply structured moments of conscious reflection: an
effort is made to understand whether and at which level established goals
have been achieved, and what to do to improve the situation, whatever it
may be.
The focus is both on the results and on the process being used to achieve
them. The typical phases of a hansei are the following.
1. What did we set out to do? This initial phase involves refocusing on
objectives and results we reached or should have reached.
2. What actually happened? Reflecting on the actual achievements versus
the pre-established objectives.
3. Why did it happen? Analyzing the causes of the gaps (positive and
negative) between the expected outcomes and actual outcomes.
4. What are we going to do next time? The final phase, the most impor-
tant of all, is devoted to thinking constructively about the future and to
developing a structured action plan to address the root causes of the
gaps that were discovered.
The time dedicated to each of the four phases should not be the same.
A best practice is to spend about half of the available time on doing the
fourth phase well; use a quarter of the time to really understand the
causes (the third phase), while the remaining time should be sufficient to
deal with the first two questions. You may not believe it, but sometimes
the first difficulty we encounter when we do hansei workshops with vari-
ous clients is obtaining a clear and unambiguous outline of the initial
goals toward which the people were working. During a hansei done in
2008 in a very well-known Italian company, the greatest difficulty in the
whole workshop was to achieve a shared definition of what the objec-
tives of the team were (or should have been). Everyone had a similar, but
not identical, interpretation of the goal, and in some areas of the project,
there were not even precise measures about what was done. The team
had already been working for almost a year on a new family of products,
but it effectively took almost an entire day to produce a clear and agreed-
upon point-by-point definition of objectives that should have been clear
from the very beginning of the project. This is another confirmation that
in many companies there is still a widespread tendency to swing into
action before having decided precisely what to do and in which exact
direction to go. The hansei is a great way to surface wastes throughout
a project and help the team stay focused on their goals and meeting the
customer needs.
4.4.1 When Do We Do It? And Who Should Do It?

Hansei can be applied to various issues within a company, from a techni-
cal problem to a management issue, from team issues to individual ones.
What’ s more, getting used to practicing it helps people to communicate

with more and more focus on facts, figures, and results.
Hansei can be introduced at various levels of the business. When asso-
ciated with the running of a project, hansei sessions should be held at the
beginning of the project, at key milestones/learning points during the proj-
ect, and at the end.
It can also be done individually, where the main aim is constructive
personal reflection. This can be particularly useful prior to a performance
review with your boss so you may objectively see how you have progressed
and see what gaps you still need to address.
Hansei may even be used in product strategy for making major changes
related to the direction of the company.
The example in Figure 4.10 features part of a hansei used in a project to
review and led to several systemic changes in R & D in a well-known Italian
company. In this case, we inserted a few hansei sessions into the mapping of
the current state of R & D processes (Value Stream Map) to deeper probe the
wastes found and used the findings to help better define the future state map.
Figure 4.10 Example of hansei preliminary to a Value Stream Map future state.
In our experience, as shown in the example above, it is important to

have a skilled facilitator who can guide the team through the process and
can ask the right questions to harvest the learnings.
When working on very long product innovation and development proj-
ects, we recommend conducting a hansei every three months, because there
may be various kinds of problems, more or less hidden, that can be ques-
tioned. It also allows us to routinely identify, capture and share learnings
with the rest of the organization.
In essence, hansei becomes a subtle mechanism for calibrating our
actions continually and precisely, enabling us to learn from the recent past
and to achieve a better focus on what to do in the near future.
4.4.2 What Is the Difference between Hansei

and Lessons Learned?
Sometimes we are asked whether hansei is the same as lessons learned
sessions used by many companies. Answer: yes and no. For example,
one the authors once took part in an enterprise lessons learned pro-
gram in a big company. He was amazed how, in a relatively brief period
of time, an enormous database had been built up containing thousands
of lessons learned, with long prescriptive lists of what should or should
not be done on the basis of evidence gathered from dozens of projects.
Technically speaking, this database was organized very well: all you had
to do was type in a key word and the database generated hundreds of
references and recommendations for users. In your opinion, how much
was this fantastic database really used by everyone? After having spent a
lot of time and money developing it, the degree of use was so low that it
created some embarrassment initially, followed by management preach-
ing and coercion to use it and ultimately it was forgotten. Again, tech-
nology prevailed over the process when developing the lessons learned
program where input and searching prevailed on practical application of
learnings.
The point is that companies often issue recommendations of the “ don’ t
do this and you should to that” but the real question to be asked is this:
what can we do to make what we want really happen? Without a deep
understanding of the reasons why the negative (or positive) things hap-
pen, and without a careful appraisal of what can be practically done in the
future, these lessons learned mostly remain “ lessons” without being turned
into true knowledge that can be applied. Hansei helps to take data and
facts, analyze them and turn the learnings into actionable items for future
projects.
In our view, therefore, it is a good idea not to have masses of “ lessons
learned,” but to learn to be more focused on a few things that can be put
into practice. Rather than the twelve-thousand lessons learned, it is better
to have five or ten at a time, but to deeply understand them and to put into
practice what has been learned, instead of creating a white elephant that no
one will use.
4.4.3 Some Practical Examples

In Figures 4.11 and 4.12 you can see two excerpts from hansei’ s relating to
product development projects.
In the example in Figure 4.11, the team was focusing on a knowledge
“ dispersion” problem concerning issues faced and solved by installation and
maintenance technicians working on site with the client. The company had
been unable to implement effective feedback to the designers so that cer-
tain design aspects of the new product could be improved and old errors
avoided. Having done the hansei before starting the new project, the action
plan coming out of the event made it possible to improve certain processes
of the new project, and to immediately put into practice what needed to be
done to close the gap that was discovered.
Figure 4.11 Example of hansei to address organizational problems.

Figure 4.12 Example of hansei for the management of modifications.
In the example in 4.12, the purpose of the hansei was to understand the
causes and to devise feasible actions to deal with the excessive and recur-
rent number of modifications that occurred following the launch of a new
product.
By analyzing the individual modifications done to the pneumatic system
while ramping up production, the team achieved a genuine understand-
ing of the impacts— not only financial but also in terms of design, materi-
als, production, and the negative consequences of schedule delays— of
a “ rushed” choice that had been done in design phase and the lack of a
modular approach to the design. As a result of the hansei , the team decided
to introduce into the next project the Lean methodologies of Set-Based
Concurrent Engineering and modular design.
Both examples above illustrate the broad applicability of hansei . As we
have seen, it is a simple technique that can bring out great insights that can
help executives, project teams and team members to better achieve their
goals in the short and longer term.
4.5 Summary of Chapter 4

1. Choose the right tools to support processes and people . In a Lean com-
pany engaged in innovation, the first step is always to reduce waste in
processes. Tools should be evaluated based on the six criteria: integra-
tion and ease of use, support for processes, support for people, rein-
force standardization, enable organizational alignment, and assist in
organizational learning.
2. Visually align and manage the entire project team . The Obeya
Alignment System is the key tool for realizing this strategy. It simpli-
fies project management by making it visual and it facilitates on-going
collaboration.
3. Simplify all communication with the A3 methodology . This makes it pos-
sible to achieve discipline of thought, by using a tool that is also use-
ful for sharing information, conducting structured problem-solving and
driving continuous learning.
4. Structured reflection in order to learn from experience . Hansei condi-
tions people to have moments of systematic reflection, at both an indi-
vidual and group level, in order to continually improve their processes
and products.
Resources
https://www.lenovys.com/en/case-history/mahle/
https://www.lenovys.com/en/blog/tco/
Note
1. Allen T.J., Fusfeld A.R., 1974.
Chapter 5
Companies That Have

Successfully Streamlined
and Innovated Their
Product Development
This chapter looks at different cases involving Lean innovation projects. In the
two Sacmi case studies, new products were designed from scratch facing an
important change management activity due to the complete implementation of
Lean product and process development principles, for the first time in the com-
pany’s life. The Laika case study examines the innovative path taken by a com-
pany in the face of a drastic reduction in its traditional markets. The Continental
case deals with the development of a new and innovative production technol-
ogy using various strategies such as the standardization of testing activities and
Set-Based Concurrent Engineering. The latter strategy was also employed in
the Peugeot Citroën project pursued with John Drogosz. This was an important
case because it marked a decisive move in the direction of Lean Innovation on
the part of the well-known French automobile manufacturer. The case history
of Natuzzi is a very interesting business case of a company re-building, after a
dark period of recession, focused on a Lean Product and Process Development
including Modularity and Industrial Complexity reduction. Natuzzi, listed on
New York Stock Exchange, designs, produces, and markets sofas, armchairs,
and living room accessories. The end of the chapter describes a project devel-
oped in Lamborghini, famous around the world for having made its ability for
product innovation an indisputable strategic competitive weapon.
183
5.1 Sacmi Ceramics

5.1.1 Mature Technology and Market Leadership. The
Quest for Continuous Improvement and Growth
Sacmi is a world-leading international group that manufactures machinery
for the ceramics industry, for the beverages and packaging sector, and for
food and plastics processing. With 4,239 employees and annual sales of
about 1.4 billion euros, the company has distinguished itself by develop-
ing innovative solutions in the various sectors in which it operates. The
Ceramics Division, with 2,337 employees and annual sales of 881 million
euros,1 occupies a prominent position in the world of machines and plants
for the manufacturing of tiles, bathroom fixtures, plates, firebricks, and stan-
dard bricks.
The Sacmi Lean Innovation Ceramics project began with very ambitious
goals, when General Director Pietro Cassani agreed with his team on the
need to develop an entirely new product with lower costs, a shorter time
to market, and, above all, improving performance of current processes. The
point of departure was a consolidated, long-established product, a press for
producing ceramic tiles that had been on the market for several years.
The project started with the formation of a steering committee, the choice
of a team leader, the selection of the team members, and discussion regard-
ing everything that would be needed to overcome the current status quo in
terms of project performance and company culture. The first sessions con-
sisted of basic training in the key concepts of Lean Product Development
and Innovation. This was quickly followed by the definition of the product
scope, the perceived challenges to overcome, and a rough plan to roll out
the Lean principles into the project.
5.1.2 Value Stream Mapping— Current State

The first activity done with the team was to do an assessment of the current
capabilities of their product development process to gain an understand-
ing of the opportunities that were present. To analyze the current situa-
tion, the team applied the Value Stream Mapping methodology for Product
Development developed by Morgan and Liker.
The team chose the latest generation press as their reference when map-
ping the current state, considering everything that had been done to develop
one of the most recent machines brought out onto the market, the so-called
Companies That Have Successfully Streamlined and Innovated ◾ 185
Imola series. In the Value Stream workshops, we pieced together the his-
tory and the ways in which the team had worked, going right back to the
moment in which this earlier machine had been defined, and examining the
initial documents which formalized the decision to launch the production.
A total of fourteen groups within the company were involved in the various
activities of product development and participated in creating and analyz-
ing the current state map. They mapped all their activities and interactions,
which generated fourteen different sub-Value Streams, including the design,
purchasing, logistics, industrialization, commercial, and marketing depart-
ments. In building up a timeline of the activities, the team indicated the
initial estimates that were made for the various activities and milestones in
the official documents drawn up at the beginning of the project, and then
represented the actual duration of the same activities, indicating the point
when the milestones were achieved.
It was a very “ enlightening” experience for the people involved to recon-
struct and map their activities, and above all, to see objectively the differ-
ence between their perception about the process and its duration and what
actually happened (see Figure 5.1).
In particular, the team was shocked by the frequent iterations of the
same activities and the repetition of the same milestones in the course of
the product’ s development. The team highlighted every time an activity was
repeated; where someone had to wait for information, documents, draw-
ings, or semi-finished parts from someone else; and any critical issues which
impeded the work of others. The map of processes was extremely useful in
Figure 5.1 Current State Value Stream Map.

Figure 5.2 Quantification of performance in the VSM analysis.

identifying the opportunities for improvement such as— poorly synchronized
activities, rework, modifications, Stop and Go, waiting. Figure 5.2 shows the
completed map in electronic format with some quantification of the current
state performance of the process.
During the mapping workshop, a new awareness began to emerge, and
it was amazing to see the change in the attitude of the team members in
describing their everyday processes using sticky notes, and crude printouts
pinned to a large wall. After some initial denial, the seed of doubt began
to grow in the group, and people began to entertain the idea that several
things could be improved and that some old ways of doing things should be
completely rethought. It had become evident that there were certain social
and organizational dysfunctions, combined with several technical problems,
that had become commonplace over the years. The following is a list of the
wastes the team decided to work on for the new project:
◾ Unsynchronized activities
◾ Large number of hand-overs
◾ Communication barriers
◾ Waiting and delays
◾ Numerous instances of reworking and modifications in all the groups
◾ Unexploited and poorly structured knowledge: decisions based on
sometimes inadequate data and with few existing standards
◾ Variability in the duration of processes and expected outputs

◾ Absence of “ discipline” to timelines
For every identified area of waste, they tried to identify the root cause
and define a possible countermeasure that could be adopted in the new
project. Below are examples (from Figures 5.3 to 5.6) summarizing the iden-
tified areas of waste, together with the appropriate countermeasures.
5.1.3 Hansei
The next phase after the Value Stream Current State Mapping workshop was
the hansei sessions. These moments of group reflection dealt with a num-
ber of different issues identified in the Current State Map, including plan-
ning, monitoring of costs, and the conducting of the Design Review. For
each of them, the group followed the typical hansei approach discussed
in Chapter 4. They were asked to consider what objectives had been set at
the beginning of the previous project, what results had been achieved (or
not), what were the causes for any of the deviations (negative or positive)
between goals set and results achieved, and what actions could be imple-
mented in designing the new product to avoid poor performance seen in
the past.
The hansei sessions yielded a series of solutions to various critical issues
found within the product development processes. In these sessions, as in
the earlier Value Stream Mapping, the coach– consultant’ s task was simply to
facilitate the discussion in a wholly impartial manner, and to highlight, on a
Figure 5.3 Example of an area of waste and relative countermeasures.


case-by-case and problem-by-problem basis, possible solutions adopted by
other companies in similar circumstances. However, no solution was ever
imposed. It was left up to the team to find, adapt, or choose the solutions
and specific actions deemed most suitable for their own project.
Figures 5.7 and 5.8 illustrate the output of two of the hansei sessions.
An important aspect of this phase of the work was that the team became
more aware and focused in the search for innovative ways of dealing with
historic problems that they had come to accept as unavoidable parts of their
development process.
Figure 5.7 Excerpt from a hansei session.
5.1.4 Value Stream Mapping— Future State

The following step for the team was to draw up the Future State Value
Stream Map to represent the processes to follow for future projects.
Combining the countermeasures that had emerged as a result of the Current
State Value Stream Map and the actions defined in the hansei sessions, the
team outlined a proposed new product development process in which the
activities were remodeled to address earlier problems of synchronization,
Figure 5.8 Excerpt from a hansei session.
Figure 5.9 Future State VSM.
difficulties in communication, and the need to avoid endless modifications

(Figure 5.9).
While drawing the Future State Map, it became clear that some activi-
ties, if introduced at the appropriate time, could not only reduce the overall
duration of the project, but also increase the final quality of the product,
responding better to the market’ s and manufacturing’ s needs. Some exam-
ples were the project preparation phases, the defining of the Concept Paper,
and goal-setting, together with a greater emphasis on getting the project
team truly involved in the very early stages of the project (Figure 5.10).
Figure 5.10 Detail of the future state process: the start phase of the project.
Another significant change introduced into the new product development

flow was the early involvement of suppliers with long lead times, such as the
foundries for the cast-iron bases, and those supplying very expensive com-
ponents, effectively incorporating these suppliers into the co-design needed
to meet the cost reduction goals of the project. (Figure 5.11). In this case, the
purchasing department was to play a key role in the choice of the supplier-
partner to involve in the early concept phase, well before the traditional
purchase order would have typically been placed. The only condition that
had to be carefully respected was the importance of not changing supplier
partway through the project in order to avoid wasting the great efforts made
by the company’ s designers and their counterparts at the suppliers.
Another major change in the new process’s development was the com-
plete reorganization of the product concept and design phases, with the sys-
tematic incorporation of the techniques of Set-Based Concurrent Engineering
for those parts of the product with greatest added value for the client and
greatest cost for the company (Figure 5.12).
5.1.5 Project Start: The Concept Paper

Once the new future state map had been defined, the project execution
proceeded with incorporating the first Lean technique: the Concept Paper.
Figure 5.11 Detail of future state process: selection, co-design and management of
key suppliers.
Figure 5.12 Detail of future state process: conceptual pre-study and Set-Based
Concurrent Engineering phase.
During this phase of the project, the team conducted a careful analysis
of the performance and cost drivers of the new product (i.e. the stamped
concrete press) as viewed by their customers and by benchmarking the
competition. The former was carried out in conjunction with the commercial
managers, doing on-site visits with customers, and direct contact with end-
users and technicians who maintained the machines. The Concept Paper
phase lasted longer than expected; various conflicts were identified and
deliberately made to emerge in order to demonstrate how important it is to
“ force” team members to reach consensus in the early phases of the project,
rather than waiting for conflicts to reemerge when the designs have nearly
been finalized. For example, as the Concept Paper was being prepared, it
emerged that the team’ s principal motive for innovating the product was to
avoid its rapid obsolescence, which could have led to a loss in market share
and/or reduced margins.
As the market needs were thoroughly explored, the team gradually
focused on the areas of the product where it would be possible to improve
customer satisfaction. These areas included:
◾ User-friendly computer interface

◾ Troubleshooting carried out in the computer on the machine itself
◾ Improvement of the mechanical devices.
Different degrees of priority (“ must,” “ must not,” and “ nice to have” ) were
identified for the various needs of the product.
Here are some examples of “ must-haves” of the product:
◾ Preloaded structure
◾ Use of castings
◾ Use of capacity and pressure multiplier
◾ Use of variable capacity pump
◾ New computer interface.
The following were “ nice to have” items:
◾ Binding
◾ Power supply management of die temperature
◾ Inductive safety micros
◾ Inputs for the management of external equipment signals and software
configuration for these inputs
◾ Optional integrated device to facilitate the change of die/buffer

◾ Sacmi structural proportional logic elements
◾ Detector device for the level of oil contamination
◾ Visual oil level indicator.
And finally, below was a “ must not” for the new product definition:
◾ Switchboard.
Trade-off curves were defined to aid in the understanding and analysis of

the major cost drivers of the product. The technical and financial data relat-
ing to various types of machine were plotted and compared. What emerged
most evidently was a known driver, namely weight, and its influence on
overall cost was quantified according to the different models of the machine
itself (Figure 5.13).
This insight from the trade-off curves led the project team to later use the
latest generation finite element method (FEM) for topological optimization in
order to find the best technical solution for the cast-iron load-bearing struc-
ture; combining structural solidity with the need to keep weight to a strict
minimum to achieve the product cost target.
Figure 5.13 Example of a trade-off curve. (The numerical values have been removed
for reasons of confidentiality.)
5.1.6 Kentou
As soon as the Concept Paper was completed, the team began the concept
phase by exploring many design alternatives. This proved to be a particu-
larly laborious process, because the degree of innovation needed was very
high based on the requirements set in the Concept Paper. For example, the
team produced over twenty-five different product architecture solutions,
which were then narrowed down through numerical methods and qualita-
tive evaluation. Before being formally “ designed,” each solution was vetted
in the “ old-fashioned” way, using paper, pencil, and brains. In Figures 5.14
through 5.16, you can see some examples of the range of solutions for vari-
ous parts of the machine.
The team considered the data, facts, and analyses provided by suppli-
ers, in-house assemblers, and all the other staff involved when preparing an
evaluation matrix (Figure 5.17), which enabled them to whittle down the ini-
tial twenty-five solutions to just four in a relatively short period of time. The
remaining four contenders were then developed in parallel through to the
point at which just two were chosen after prototyping. One was more prom-
ising in terms of costs and performance, but also more innovative and risky,
while the other was a little less performing and less innovative, but had less
technical risk, and was therefore chosen as a backup solution thus applying
to the letter one of the basic principles of Set-Based Concurrent Engineering.
Figure 5.14 Example of conceptual solution developed in the Kentou phase.

More trade-off curves were generated to compare and evaluate the differ-
ent solutions and took into account various critical factors including indexes
of quality, cost, lead time, maintainability, logistics, etc. Some examples can
be seen in Figure 5.18.
The more analysis that was done upfront, the more it became appar-
ent how many things had historically gone unobserved or untreated until
Figure 5.17 Section of the final evaluation matrix.
Figure 5.18 Example of trade-off curves produced for the final evaluation in the
Kentou phase.
much later in the project. Many factors did not seem critical at first until
they analyzed them in depth. People realized how many times lots of prob-
lems could have been avoided in the past if more time had been devoted to
preventing them and to looking for alternatives at the appropriate moment.
By bearing in mind critical factors such as the prototype supply time, the
supplier cost variances, and various critical in-house production operations,
it became possible to produce better comparative risk evaluations that cast a
different light on each of the alternatives being considered during the kentou
phase.
5.1.7 Managing the Project: The Obeya System

The whole project was managed through the Obeya System (Figure 5.19).
The large, well-equipped room grew and changed appearance several times
as the work progressed, becoming the venue for all meetings and all major
activities. As it was the first project to be managed in this way at Sacmi, it
was also used as a point of reference for other working groups that would
subsequently embark on their own Lean projects. Avoiding long-winded
explanations, it was sufficient to take other project teams to the Obeya for
half an hour or so to walk the walls and observe a meeting, and they were
able to quickly grasp the principles of the system and how it had been
applied in the Ceramics Lean Innovation Team.
5.1.8 The “ Quick Die Change” Subgroup— Adding

Customer Value
An optional integrated device to make it easier to change the die was
defined in the Concept Paper phase as a “ nice to have” that would improve
customer satisfaction with the machine. Based on the difficulty encoun-
tered by many clients in changing the die to switch from one tile model to
another, the project team, in conjunction with the sales department, decided
to set up a parallel working group to address this customer challenge.
Figure 5.19 The Obeya room of the project.

The first step was to devise the “set-up matrix,” in order to identify the
different possible types of die changes. This was immediately followed by the
filming of a set-up at a customer’s factory. The time it took to change the dye
amounted to about seven hours. Interviews conducted with other customers
revealed that the best case of a die change for a well-organized team was not
less than five hours. The team clearly saw the value proposition to the client
of reducing the changeover time and consequently set an aggressive target
for the new machine: to reduce the die change time from seven hours to just
thirty minutes, thanks to the redesign of the machine mechanisms
Analysis of the video (Figure 5.20) first made it possible to see the wastes
in the current machine changeover and to establish the requirements and
new specifications for the new press.
The project for the optional quick die change device was conducted by
applying the same basic methodology used for the overall project, as can be
seen in summary form in Figure 5.21.
5.1.9 Conclusions
In September 2010, the new Sacmi PH 3200 machine, complete with the
quick die change device, was presented at Tecnargilla, the most impor-
tant trade fair in the world for supplies to the ceramics and brick industry.
Figure 5.20 Part of the map of preliminary activities in the die change process.
Figure 5.21 Summary of the working method for the “ quick die change” subgroup.
Figure 5.22 Comparison of the machines before and after the project.
The fair was an ideal opportunity to demonstrate to the market the unique
thirty-minute quick dye change device and the innovative, attractively
designed machine (Figure 5.22), confirming Sacmi’ s world leadership in the
ceramics sector.
Discussing the company’ s line of presses and efforts to achieve “ maxi-
mum flexibility and the capacity to create products with high added value,”
Sacmi’ s Annual Report comments:2
Regarding the pressing, the positive performance of the lat-

est presses released on the market— the PH10.000 and PH3200
Lean— should also be pointed out.
The innovation of fast die changeover has won widespread
approval from the ceramic world as it constitutes another step
toward achieving ever more flexible production lines.
In the end, both the innovative solution and even the second backup
solution were produced. The team managed to reduce the time it took to
complete the whole project of a completely new innovative machine by 30%
over prior projects and, in reality, launching two final products simultane-
ously. The innovative quick die change solution was undoubtedly the most
noteworthy, but other significant improvements were realized:
◾ Better machine diagnostics

◾ Higher speed
◾ Better operator ergonomics
◾ Revolutionary design of the fixed transverse
◾ A new method of structural clamping
◾ A new and more functional oil-pressure system.
All this was made possible by a group of people— designers, sales staff,
technicians, maintenance people, assemblers— led by an expert project
leader, who could see the potential benefits of applying Lean techniques
in product development. In addition, Sacmi had a leadership team who
had the courage to allow their employees to challenge the company’ s
own practices that had served them well over the years. Through the first
Lean Innovation project, Sacmi managed to channel the competence and
skills of their people into a true strategic competitive advantage in their
marketplace.
5.2 Laika
5.2.1 Innovation and Lean Leadership as a
Reaction to Economic Crisis
The Laika project is quite a particular example of Lean Innovation and
Product Development, implemented in a period of deep economic crisis— an
example showing courage, strength, resolve, and intuition in a time of fear

and uncertainty.
The leading motorhome manufacturer in Italy, Laika, was founded in
1964 at Tavernelle Val di Pesa, about thirty kilometers from Florence, Italy,
and the company is still based there today. The founder, Giovambattista
Moscardini, was fascinated by travel and the new human adventures hap-
pening with the exploration of space, which were opening up exciting new
horizons. That’ s why he decided to name the company after the first dog
to be sent into space and chose as its logo, a red greyhound with wings,
which is still present as a powerful brand on all the company’ s vehicles. The
year of the company’ s founding, 1964, was also the year of its first caravan
model, the tiny 500 (Figure 5.23), which was so small that it could be towed
by a Fiat 500.
Laika is owned since 2000 by ERWIN HYMER, the German group that
unifies Europe’ s leading caravan and motor home manufacturers, approxi-
mately 50,000 vehicles sold, with a total turnover of 1.9 billion euros and
approximately 5,500 employees.
The company, the premium brand manufacturer of the German Group,
embarked on its Lean innovation journey at a time when the storm of the
economic crisis was just beginning, as can be seen from the graph of sales
in Europe in Figure 5.24.
The European market dipped sharply from 88,000 vehicles to just 65,000
in less than two years, while the situation in Italy was even worse, with
sales falling from 15,000 to 8,000 in the same period. In a sector accustomed
to steady continual growth and to working with large stocks both at dealers
and manufacturers, this sharp drop in sales caused very serious problems,
putting the survival of many companies at risk. Despite the gravity of the
Figure 5.23 The Laika 500, the first caravan produced in Italy.
Europe
100.000
87.220 88.180
90.000 83.074
81.210
80.000 74.366
66.528 65.945
70.000
60.000
50.000
40.000
30.000
20.000
10.000
0
2003 2004 2005 2006 2007 2008 2009
Figure 5.24 Sales in Europe, 2003– 2009.
situation, together with Laika management, we helped organize a project

with the goal of capitalizing on all the strategic opportunities offered by the
moment, rather than simply limiting ourselves to cutting costs in the face of
a drastic fall in sales.
Convinced that it would be extremely risky to stake everything on tradi-
tional forms of cost reduction, the team prepared two lines of action, one
focusing on efficiency, the other one on effectiveness. For the first aspect, we
tried to make the company more streamlined and flexible, while from an effec-
tivness point of view, we endeavored to increase the company’s position in the
marketplace. This was achieved by exploring new ideas on various fronts, rang-
ing from new products to new markets, in addition to a wide range of innova-
tions along the entire value chain. The two projects’ goals were as follows:
1. Efficiency: reduction of waste and lower costs

– Reduction of inventories along the entire value chain
– Reduction in production capacity
– Reduction in general costs
– Reduction in staff costs
– Reduction in production batches/increased flexibility.
2. Effectiveness: increase customer value and grow sales

– New, top-of-the-line products
– Invest in products for new foreign markets
– Invest in new sales networks and Lean Sales Organization
– Enlarge the dealer network
– Invest in marketing and post-sales
– New products with higher value and lower costs in their price
ranges.
It was necessary to take a different approach to these projects versus
other improvement activities undertaken by the company in the past.
With the signs of an economic crisis from outside and a wave of frustra-
tion on the inside, there were clear signs of a demoralized workforce at
every level in the company. In some departments, for instance, the rate
of absenteeism was close to 10%, a discouraging sign for obtaining every-
one’ s positive involvement in a time requiring radical change. For this
reason, one of the projects’ clear goals was to put people at the center
of the renewal process. The Lean transformation included various areas,
from the supply chain to vehicle assembly, design, and post-sales. Strong
emphasis was placed on aspects of leadership, the management involve-
ment, and engagement of the entire workforce, so that the improvement
could be rapidly accepted, thus making the people the real drivers of
sustainable change along the entire value chain using cross-functional
teams (Figure 5.25). In a little less than two years, absenteeism fell to
almost zero, a clear demonstration of the effectiveness of the steps taken
to involve people in the project.
The company’ s top management backed the approach. One of the great-
est supporters was the chief executive, Jan De Haas, a German who has
been in Italy for many years. As he was involved firsthand in the process
of profound transformation, we asked him to describe his thoughts on the
project, and to give an overview of the transformation in relation to the dif-
ficult period the company went through. This is what he said about the Lean
Innovation projects in Laika:
Italy represented 70% of Laika’ s overall sales, and in two years the
market fell by almost 50%. Speaking in terms of inventory, this
created some really worrying moments for us, for our manufactur-
ers and for our dealers. And so began our journey into the lean
world, which meant, first of all, reducing inventory in order to
obtain current assets that would otherwise have been tied up in
Design
Spare Parts
Purchases Management
Supply Chain Lean Leadership Assembly line
Internal
logistics Pre-assembly
Processing
Figure 5.25 The model of Lean Innovation in Laika: putting people at the center of
the program.
the unsold inventories; then production was reduced by 40% in

the space of a few months. To avoid errors made in the past, we
reduced production batches to just five vehicles. Accustomed as
we were to producing as many as 40 vehicles of the same model
at the same time, switching to producing just the vehicles that had
been ordered required a great effort. Obviously, this contraction
in production also led to staff reductions, and we resorted to tools
such as the wages guarantee fund, staff transfers, and early retire-
ment, giving great attention to every single cost. It was immedi-
ately obvious that the crisis would not be short and that the market
would not return to its previous levels. We therefore chose to invest
heavily to get through the crisis and we realized that growth could
not be achieved by increasing the volume of production, as had
once been the case, but that this time we would quickly need to
learn to “ take” market share from our competitors. We decided to
invest, then, in top-range products in order to win customers with
a high spending capacity; and in new models with higher perfor-
mance, greater value, and less cost in the other ranges as well. We
invested in the sales network, increasing the number of salespeople
and upping the number of dealers by 32. We invested in marketing
and post-sales, trying to obtain efficiency and transparency. In

other words, we tried to be lean not only in production, but also
at the very heart of our product and along the whole value chain.
The most difficult year for us was 2008– 2009 (the tax year for us
runs from September to August). This year, 2010– 2011, although
the markets are still dropping, we have had a 22% increase in sales
over the previous year. We have invested a lot in innovation: we
had 26 motorhome models when the crisis began, and now we
have 40, in order to satisfy the new markets we have expanded
into. On the one hand this has meant reducing production batches
and optimizing the whole value chain, from the supplier through to
delivery of the vehicle; on the other, it has created a more complex
situation to manage. The company must be ready to react with an
“ on-off” approach, and we have chosen a Lean Innovation project
suitable for reaching this goal. Staff training was fundamental: for
about 46 years, people have ridden the wave of success, and so
they were mentally ill-disposed to change, also because they were
not used to pinpointing what was exactly wrong in their processes.
We began, then, with lean training, starting from the top, because
“ the fish always stinks from the head down,” gradually extend-
ing the program to include every staff member. Each of us found
ourselves learning to recognize waste in our own particular area,
before taking steps to improve others’ processes. This adventure
was a great lesson for me. Even if we now have strong signals of
positive growth, we do not know in reality how long this crisis
will last. But I think that what we have learned and applied will be
useful for us in readapting once again whenever situations of this
kind occur again and whenever the need arises.
5.2.2 The New Kreos Motorhome Project

The Kreos Motorhome project was one of the first steps taken toward the
adoption of a complete Lean Product and Process Development methodol-
ogy at Laika. This methodology was deemed necessary for ensuring a reduc-
tion in development time and in costs, while increasing quality and customer
satisfaction. The study phase of the project began in June 2009, and the
established goals were very ambitious. Three key areas for improvement
were identified: style, quality, and weight reduction . Previous experiences
had not been shining examples of collaboration between the production and
design departments. For this reason, the team decided to tackle the research
and development process with a total design approach, that is to say, to
ensure that the styling did not compromise the production process, and that
design choices were geared from the outset to achieve the goal of mini-
mum overall cost. This led to intense collaboration between designers and
production engineers— often worlds apart— in order to be able to produce
an attractive new motorhome with high levels of safety, avant-garde quality,
reduced weight, and at a lower cost than previous models.
Compared to Laika’ s traditional approach, eight new approaches were
introduced.
1. Choice of a single project leader to see the project through from start to
finish.
2. Extended project team that includes, from the very outset, people with
expertise in manufacturing.
3. Careful, jointly agreed-upon project specifications, giving due attention
to marketing, design, engineering, and production considerations from
the very start.
4. Exploration of many different conceptual design alternatives, with
evaluations by all the team members, including early participation of
key suppliers.
5. Direct elimination of the most frequent problems of quality in produc-
tion through technical countermeasures being directly designed into the
product.
6. Reduction in assembly time, with the definition of kitting assembly to
be done line-side and pre-assembled subsystems delivered directly to
the line.
7. Use of frequent cross-functional Design Reviews with the participation
of marketing, engineering, and production people during the concept
and design phases.
8. Construction of the first prototype under the direct supervision of the
future production manager, together with a dedicated designer.
In the months following the official start of the project, numerous meet-
ings took place to shape up and redefine the various aspects of the product
design with the engineering and production personnel. Exploration alterna-
tive concepts resulted in innovative solutions arising from the juxtaposition
of styling, aesthetic, technical, and production points of view.
One example is the fundamental requirement to give resistance to the

load-bearing element of the cab and to attach the front windscreen to it.
This was obtained by a single fiberglass unit produced with RTM technol-
ogy (Resin Transfer Molding) rather than hand-layered, because it had to be
lighter while ensuring dimensional stability. The technology involved is a
particular fiberglass production technique, which yields pieces with superior
mechanical properties to those obtained with the traditional method, weigh
less (all mechanical characteristics being equal), have a uniform thickness,
and a lower manufacturing cost.
Around this structural, load-bearing element, the designers and techni-
cians produced what became familiarly known as the “ dress.” Here too, the
dual objective to obtain attractive forms with the minimum industrial cost
resulted in a truly innovative solution, from both the stylistic and manufac-
turing points of view. The technicians opted to build the carters in thermally
molded plastic.
These solutions reduced the weight and improved quality, because the
most critical components were made directly from the colored sheet and
did not need to be painted— an aspect of fundamental importance, given
the innumerable problems that had always arisen as a result of the need
to paint fiberglass elements during production. The guidelines provided
by the marketing department envisioned a vehicle capable of conveying a
sense of innovation while at the same time retaining a classic image. To
meet this need, it was decided, very appreciated by the marketing leads, to
opt for an enormous windshield that was integrated with the side windows
(Figure 5.26).
The choice of headlights was crucial for modeling the bodywork com-
ponents in plastic (Figure 5.27). In this case, adopting solutions from the
Figure 5.26 One of the first sketches of the new Laika Kreos.
Figure 5.27 Final solution for the new integrated frontal area.
automotive sector was a winner, because for the first time Laika was able
to fit lights totally integrated with the bodywork, thereby obtaining various
advantages: this created efficiency and enhanced customer value, in that the
new lighting system made nighttime driving less tiring, thus increasing both
comfort and safety.
Various problems arose but were promptly resolved in the frequent
Design Reviews, without having to wait for the traditional feedback from
the field once the vehicle was complete. For example, the large windshield
solution initially created problems of thermal insulation. For this reason the
plant technicians developed forced air solutions to avoid condensation and
cold points in the area near the glass (Figure 5.28), especially in view of
the fact that the large “ mobile” top bed, another great feature of the new
motorhome, was just behind the cabin windshield.
Figure 5.28 Plant solution to solve the issue of thermal insulation at the “ drawing
board.”
The 3D modeling of the cabin was completed in February 2010. It then

took another three months to produce the prototype molds and the first
sample pieces in order to build a prototype of the vehicle, necessary for
obtaining final approval from Sales and Marketing. In this period, there was
an ongoing discussion between the various departments in order to solve
production and quality issues, because, quite aside from the aesthetics, it
was important to meet production cost targets. This upfront effort led to
a significant reduction in the number of modifications after the prototype
phase.
The prototype was finished in June 2010 and met the all the require-
ments set at the beginning of the project: soft, elegant lines combined with a
dynamic form, and the resolution of chronic past production problems. The
satisfaction on the faces of the marketing managers was the response every-
one was hoping for, namely a green light to move on to manufacturing of
the production molds. Below is a summary of the main results achieved in
the Lean Innovation project:
1. Reduction of the cabin weight by about fifteen kg, 5% of the total.

2. Total elimination of paint problems regarding fiberglass parts.
3. Reduction in the number of cabin components.
4. Reduction in the cost of the cabin by about 10%.
5. Reduction in the total project time, from idea to prototype, by about
25% compared to past projects.
6. Reduction in the total number of modifications required after the first
prototype.
7. Reduction in production line assembly time by approximately 20%.
The project also relied strongly on the production departments: from the
woodworking to the mechanical processing of the furniture, from the line-
side assembly of units to the final assembly of the vehicle, and from the
primary materials warehouse to suppliers. The final product is shown in
Figure 5.29.
Although we are not focusing, in this book, on the specific Lean produc-
tion innovation, we would like to provide a brief sketch of the activities that
were carried out insofar as they were linked to the important process of the
overall transformation.
We tried to involve people in the process of introducing improvements
right from the beginning, partly because they have a great deal of know-
how, and also to dispel the frustrating “ crisis syndrome” that was hanging
Figure 5.29 Final vehicle.

heavily in the air at the start of the project. The following, in short, is a list
of the activities carried out and still underway:
1. Efficiency in production
a. Improvement of material flow in departments
b. Creation of a single “ mixed model” assembly line to replace the cur-
rent lines
c. System of planning, management, and process checks, with the
introduction of production leveling techniques
d. Improvement of individual work stations, from ergonomics to
standardization
e. Reduction of changeover and set-up times, both for numerically con-
trolled machines and in the assembly areas
f. Extension of Visual Management to every department
g. Increases in Overall Equipment Effectiveness
2. Quality improvement
a. Reduction in scrap on the production line
b. Reduction in scrap at the suppliers’ sites
c. Reduction of complaints by dealers and end customers
3. Optimization of Supply Chain
a. Reduction in supplier lead times
b. Reduction in total lead time in the factory
c. Introduction of an integrated Vendor Rating system
d. Reduction in the total transport and handling costs for components

e. Reduction in the amount of occupied space and the quantity of
materials in the warehouse
4. Integrated performance control system
a. Definition of Key Performance Indicators (KPI) for each level in the
company
b. Introduction of a KPI management and control system
5.2.3 Coaching and Training

The project at Laika was accompanied by a training path focusing both
on technical matters and on social, relational, and motivational issues. We
organized a strategic program designed to activate a self-generating system
of continuous improvement, the objective being to achieve challenging goals
while respecting people. The coaching program has included the optimiza-
tion of working methods, the adoption of effective relational strategies in
management, personal, and professional growth, and the on-going develop-
ment of the skills of all employees.
One area of focus was to reinforce the sense of loyalty to the com-
pany, creating a team in which each member could work together but
also autonomously, with respect to clearly defined and agreed objectives,
valuing their individual contribution as well as their contribution to the
team. The result has been a marked improvement in employee morale
and a motivated management team that challenges and empowers its
employees.
5.2.4 Next Steps

The Laika activities are currently in full swing: new efforts are underway to
consolidate Lean Development methodologies and to extend them to the
whole family of products (Figure 5.30); a new plant is being designed with
the goal of becoming a model in Europe for the whole motorhome sector.
Lean Manufacturing activities continue to be expanded in all the produc-
tion departments and now with suppliers. Having successfully overcome the
perilous period of the economic crisis, Laika has actually strengthened itself
using technology and innovation as a strategic lever for success. In fact, it is
no coincidence that the new program has the symbolic name of “ Fortemente
Laika,” aka, “ Strongly Laika.”
Figure 5.30 The CEO of Laika S.p.A., Jan De Haas, at the opening session of new
program.
5.3 Sacmi Closures

5.3.1 Cut Costs or Earn More?
Sacmi’ s Closures & Containers Division, which employs 365 staff and has
annual sales of around 170 million euros,3 produces individual machines
and complete manufacturing systems for the beverage industry. The product
range includes equipment for the manufacturing of containers, for bottling
and labeling, and for the handling of the finished product. Figure 5.31 shows
some of the finished products made by the Sacmi machines.
In this project, we dealt with the development of a new machine to pro-
duce plastic bottle caps with “ compression” technology (Figure 5.32). The
first time we saw this machine we felt overwhelmed by its complexity. It had
more than seven-thousand components and required an incredible number
of different technologies to manufacture the machine: from the casting of the
cast-iron base to electronic micrometers for the precision control of the die
position, from rough-and-ready carpentry to mechanical processes accurate
down to one hundredth of a millimeter, from granules of plastic to the melt-
ing and automatic transportation of boiling drops of molten plastic into steel
dies, ready to open and close with impressive rapid synchronization. Now
imagine an enormous disc one to two meters wide, about one-meter high,
with the number of cavities ranging from twenty-four to eighty according
to the model, in which the dies are housed. The disc turns at such a high
Figure 5.31 Examples of products made by Sacmi Closures & Containers machines.
Figure 5.32 The existing machine at the start of the project.
rate that it is impossible to see what is happening inside or to distinguish

between the opening and closing of the dies. Imagine seeing the machine
spewing out ten to thirty-five plastic tops per second, all 100% checked for
quality, weight, and size. It is an amazing machine to watch in action.
5.3.2 Current State Value Stream Mapping

When we started, the time required to design such a complex machine
ranged from twenty-four to forty-eight months, depending on the features
required in the machine.
Figure 5.33 Present State Value Stream Map.
Figure 5.33 shows the complete map of product development processes

mapped in the initial workshops. It was an extremely valuable exercise,
because it enabled an understanding of the technical and social interac-
tions occurring across the company over the almost four years of develop-
ment. On the vertical axis are the titles of the people or groups involved
such as logistics, production, tooling, engineering, simulation, etc. Along
the horizontal axis is the timeline of the past project. During the session,
we witnessed an interesting phenomenon: a growing perception of the real
duration of the project by the people involved, on the basis of real data
as they were gathered. At the beginning, there was no emphasis on the
duration of the projects by project teams and management. Projects were
regarded as “ finished” when the first machine was released into the market,
even though a team continued to make various modifications and adjust-
ments for the following eighteen months. The detailed reconstruction of the
flow of the project allowed many lessons to be learned, which were then
transformed into various improvement actions. The main problems discov-
ered were the following:
1. Communication barriers. The team clearly saw the effect of communica-

tions barriers and of the lack of involvement by some members in the
early phases of the project. For example, seeing that a colleague down-
stream repeated the same activity three times due to inadequate communi-
cations upfront. This helped facilitate the first changes in attitudes among
the new project team regarding the importance to truly collaborate at the
right time versus simply pushing data whenever it was available.
2. Numerous modifications by all the working groups. People were so
accustomed to making modifications in every phase of the project
(including after launch) that they confused modifications with normal
activities. We quantified the real impact of modifications, making them
one of the most critical areas to work on.
3. Unexploited and poorly structured knowledge. This sometimes led to
decisions being made rapidly with insufficient data. We are talking here
of a group of knowledgeable people accustomed to making quick deci-
sions based on experience and “ gut feel” that has made them world
leaders in their technologies. However, when they evaluated the real
effect of decisions taken in the past and saw the rework it often caused
later, it became apparent that sometimes, in order to go faster on the
overall project, it is better to slow down.
4. Variability in the duration of processes and expected outputs . The same
activity sometimes took a month and at other times three months
depending on who did the task. This finding led to a better understand-
ing by the team of why the standardization of products, processes and
competencies is important.
5. Impact of trade fairs on the development of a new product. The com-
pany must attend all the top trade fairs in their industry, especially when
launching new products. However, this can lead to problems during the
product development cycle. The failure to manage this need brought
development activities to a standstill in order to give priority to the
upcoming fair. When a product or a prototype needed a modification to
meet the timing of the fair, the development activities halted. One of the
ideas implemented was to increase the number of prototypes to be built
from two to three. The idea was to use one of these for fairs, thereby
maintaining distinct flows of activities (a difficult decision that it has not
always been possible to implement). Even if it was costly from a proto-
type standpoint, it turned out to be less costly for the overall development
project. At Sacmi, people began to realize that saving time and money
cost more at the beginning.
5.3.3 Hansei and the Future State Value Stream Map

The next steps for the team were to gain a deeper understanding of why the
critical issues identified in the current state map had occurred in the past.
What exactly happened? What will we do in the future?

(Measure of the performance) (Plan of improvement)
• Fundoshi Scheduling: create a sequence of

drawings to be issued both to the supplier and to
• Total missing or out of date for groups m \ ce \
the producon
or tools or not aligned to the bill
• Engineering Check List
• Changes of parts of the groups, but not on its
total • Verify the possibility of the introducon of 3D CAD
for further verificaon of assembly
• Design Review
• Funconal groups designed by different • Leaner procedures of designs changes

teams: at the me of installaon problems
• Using 3D CAD (see guidelines)
occur
• Verify the possibility to insert in SAP notes which
• Revision or amendment of the design without
explain the change
indicang what was changed
• Few standards between the figures with the

master from which to develop the whole • Standardize the details similar to the CCM and
design then unify the work
Figure 5.34 Excerpt from the hansei activity.
Figure 5.34 shows an excerpt from a hansei session, in which a number of

causes and countermeasures were devised. These were later adopted in the
course of the new project. Two examples of major causes for longer lead
times were the interaction between design and production in the develop-
ment phase, while the other was the excessive number of modifications
made after the first official release of the machine into the market.
Regarding the multitude of late modifications, the initial belief of the
team was that many changes made were primarily due to changes in
requirements by the external customer being transmitted via the salesper-
son. To analyze this problem more thoroughly, the team opened an A3
Problem-Solving Report to examine modifications made between 2004 and
2008. As a result, a very different picture emerged. In fact, the real sources
of the modifications were much more widely distributed: some had origi-
nated from the technical office itself; a significant proportion came from
the assembly and still, others came from the suppliers’ quality control
departments. Only a fraction came from changes in specifications. Here
too, the team, having become aware of the problem thanks to analysis
of the data and figures, devised suitable countermeasures for the future
project.
Figure 5.35 Future State Value Stream Map.
When the team defined the new processes in the Future State Value
Stream Map (Figure 5.35) for the new machine project, they tried to intro-
duce some Lean principles to deal with the main obstacles.
The Lean principles selected included:
◾ Regular work cadence and team meetings. Pre-established structured

weekly meetings, with rules known to every team member.
◾ Separation of the sub-flows of work of the various groups, with a clear
definition of necessary input and output for each. The machine was
divided into modules around a common architecture/platform.
◾ More front-loading, giving more time to the “ thinking” phase of the
project than in the past, leaving much more time for elaborating the
Concept Paper. Then giving the emerging team more time during
the Kentou, the phase of greatest creativity, during which various pos-
sible concepts were analyzed and explored in order to obtain the best
solution for the overall machine (Figure 5.36).
◾ We set a target of reducing the overall development time by about
35%– 40%, based on the proposed improvements stemming from
our reflection on past experiences and incorporating Lean principles
(Figure 5.36).
Figure 5.36 Calculating the lead time and number-of-modifications targets for the
new project.
◾ We set a target of reducing the number of modifications by 50%, in

order to immediately address the causes identified during the current
state analysis (Figure 5.36).
5.3.4 Concept Paper

The Concept Paper for this machine was one of the best we have seen in
recent years. It took two months to complete the formal paper condensed
into a document of about sixteen pages and agreed upon by all. The work
that was done was a truly unique example in terms of creativity, process
discipline, and professionalism. After the general overview, a great deal of
discussion was devoted to the following key points:
◾ Product platform rather than focusing on a particular model to launch.

◾ Overview of the product’ s use was conducted with great attention
toward existing competition, including the different technologies
applied to similar products.
◾ Historic analysis tracing the evolution of the technology and machine
performance. Key performance trade-off curves and projections of
future performance expected by the market were also included.
◾ Direct customer feedback on features, technology, and machine

concepts.
◾ Deep analysis of the market segments, the motivations underlying such
differentiation, and the number of products made according to customer
type, along with sales estimates and assumptions for each segment of
the market.
After the two months to do the key selling points, the challenges of the
project were understood by all and everyone was aligned with the scope
and goals of the project. Most importantly, everyone now had real owner-
ship in the project and a stake in its success. The time spent was a valuable
investment that involved the whole project team and not just the marketing,
design, and salespeople. The document became the “ Bible” of the project
and posted in the Obeya. Many questions and wasted time were avoided
throughout the project thanks to the great work done upfront.
5.3.5 From Efficiency to Effectiveness

The competitive analysis was carried out using the main performance crite-
ria to focus the team’ s attention not only on how to close certain gaps but
also how to make the new product stand out. The latter was done using
SWOT analysis, a matrix highlighting strengths, weaknesses, opportunities,
and threats. The characteristics to obtain in the new project were then con-
densed into a list of must-haves, nice to have, and not needed.
The team then prepared a large table of goals in the Obeya, subdividing
them into three different categories: performance, cost, and product char-
acteristics/features. For each goal, the following data were set: the current
value, the target value, the impact on EBIT, and a “ confidence to achieve”
index.
This project was initially set up to reduce costs, but at the end of the two
months spent working on the Concept Paper, the team had the courage to
do something more than what had been asked to them. In fact, thanks to
the robust interaction between production, design, and sales, and by ask-
ing the right questions, it became clear that what the market was asking for
was not simply a lower cost machine but the introduction of “ intelligent”
improvements that would help customers to use the machine better in the
field. In some cases, they made choices that determined a higher cost for
some parts of the machine, but a greater customer value and profitability for
the company.
The great value of having different points of view represented around

the same table to make decisions was confirmed by the unexpected solu-
tions which came out before startig the project. No one had thought to
increase the cost of some parts of the machine until the sales manager
understood to focus not only on cost, but on producing an answer to the
following question. What do you really need to sell more machines in the
future? For example, one of the most important measures to successfully sell
a machine was the index of machine productivity, measured in euros per
capsule produced in a unit of time.
The reflection arising from this drew attention to the reasons why the
company had lost out to competitors on some previous bids, and on the
reasons why it had been unable to sell any machines in certain areas and
to certain clients in particular. It was not only cost but rather value that was
missing
By changing point of view, then, the team moved on from a simple quest
for cost/efficiency to the search for value/effectiveness.
Once again, it is worth repeating that it is not the document or tool as
that made the difference, but the social process which involved the team to
reach consensus on what was truly value added for the customer.
5.3.6 The Project Review System and Management of the Project

This project was also managed using tools of the Project Review System. We
encountered a particular difficulty compared to other projects if we were
to achieve the 40% reduction in lead time. Namely, how to keep a steady
cadence in the various project activities. Getting a group that had some-
times a core team of more than twenty people to harmonize their activities
and deliver their part at the right time was critical. First of all, the project
was divided into seven phases and a key date was set for each of the seven
phases (Figure 5.37). For each group, key items to deliver were identified.
The activities that had to be done to realize those key deliverables were
inserted into detailed planning sheets produced directly by the individuals
responsible for each deliverable. The progress status of each element was
indicated in order to obtain visual control of the whole project on a single
sheet of A3 paper.
Finally, the group imposed upon itself a number of team norms for the
shared management of the project:
1. Plan meetings in advance, define goals and fixed duration.

Figure 5.37 Part of the Project Review System.
2. Arrive at meetings punctually and with all relevant data already pre-
pared in the form of an A3 Report.
3. For the core team: hold meetings regularly, meeting once a week on the
same day and at the same time. Attendance is mandatory for all. Inform the
other group members in the event of an emergency and you cannot attend.
4. Members of the module groups who need to discuss specific issues will
meet more than once a week as required in order to report back to the
weekly core team.
5. Define action plans (what, who, when) to address open items before
ending the meeting.
6. The group will explore feasibility and risks during the Kentou phase
and follow structured Design Reviews in the design phase.
7. The group undertakes to use the Engineering Checklists/standards pre-
vent errors, to conduct FMEA analysis, and to deal with critical issues
relating to final assembly.
5.3.7 The Kentou Phase and the Design Execution Phase

From the beginning of the project, a number of different issues needed to
be tackled, including the ones listed below.
◾ Rationalization of similar machines in order to benefit from increased

product standardization. An internal benchmarking was carried out
to adopt the existing in-house best solutions with regards to cost and
performance.
◾ Rationalization of the dies to increase the number of parts common to
the whole product range.
◾ Identification of technical solutions to reduce cycle times.
◾ Identification of technical solutions to broaden the mix of capsules pro-
ducible by the same machine.
◾ Resolution of certain known technical problems with the existing
machine.
◾ Consolidation of the degree of modularity of the machine.
◾ Find technical solutions to reduce assembly time.
◾ Find technical solutions to simplify the on-going maintenance of the
new machine
◾ Reduce the cost of components via standardization, part count reduc-
tion, and design simplification (Figure 5.38).
The team split up into different subgroups, each dedicated to one or

more of the modules: base, die wheel, extruder, oil-pressure system, elec-
tric plant, insertion wheel, dies. The team leader performed both system
Figure 5.38 The project’ s Obeya room.

integration and program management tasks, with a profile very similar to

the one of the Chief Engineer outlined in Chapter 3.
All the subgroups developed their own technical solutions, applying the
Set-Based Concurrent Engineering methodology for each critical area of the
design. They created their own Engineering Checklists and recruited into
their groups the people they needed, including maintenance technicians,
assemblers, process engineers, and key component suppliers.
These expanded teams contributed both to generate a multitude of poten-
tial solutions and provided vital input into the evaluation of each idea. The
criteria for choosing among different solutions were adapted according to
particular internal and external customer needs. When possible, trade-off
curves were used to have more objective data in evaluating potential solu-
tions. Figure 5.39 shows the design space in which the four final solutions
for the “ wheel” were evaluated.
The suppliers of critical parts were selected and involved much ear-
lier than usual. In particular, the suppliers of the wheel, base, and cou-
pling, three of the most important components in the whole machine
were involved from the early stages of Kentou. The joint design led to
great improvements in terms of ease of maintenance, reliability, and ease
of assembly. For example, the oil-pressure unit was kept separate and
positioned outside the body of the machine, making it easier to carry out
maintenance and to actually mount the unit. It was entertaining to watch
designers and assemblers debating in front of large monitors in the Obeya
####
Sol 2 Sol 2
11.700 11.700
####
Cost [K€]
? ?
####
Sol 3 Sol 1 Sol 3 Sol 1

10.500 10.500
10.500 10.500
####
? Sol 4
10.000
?
Sol 4
10.000
####
High Medium Low Low < 4h/year 4 > Medium < 8 High > 8
Reliability Maintenance
Figure 5.39 Trade-off curve for the choice of wheel solution.

room about the position of a junction or tube and being able to quickly
change the position of that junction or tube with a few clicks on a mouse,
rather than seeing them arguing in the plant when the pieces had already
been made and they had clearance issues as used to happen in the past.
5.3.8 Modifications: Are We Sure We Know the Causes?

During the project, one of the main problems we had to address was the
historically high number of design modifications made during the project,
especially after the design phase that had supposedly been completed. The
most common reason given was: “ Yes, the sales people always change the
specifications. They’ re always shifting the ground beneath us.”
As a starting point, we examined the previous one hundred modifications
in chronological order, analyzing the reasons for making the changes, mea-
suring the effects they had, and came up with solutions for each issue. Of
the hundred modifications, we found only a very small number turned out
to be associated with the external market— neither the salespeople nor the
customers had actually asked for the majority of changes.
In most cases, the causes were much simpler, internal deviations or
mix-ups due to an inadequate exchange of information between groups.
For example, a paint application not clearly indicated on the design and
therefore poorly executed, or the impossibility of fixing two parts together
because one of them lacked a hole. The objective reality, backed up by facts
and figures, helped us to focus our attention where it was needed, rather
than chasing issues based on past perceptions.
5.3.9 The Assembly of the Prototype

There were a number of “ rough patches” in the design phase, due to vari-
ous organizational, workload, and technical problems, but the team always
managed to pull together and to keep on track toward the objectives. The
assembly of the first prototype began in July 2010. Unlike what traditionally
would have happened, a number of important new steps were introduced to
improve the prototype which included:
1. A designer from the technical office always on-site throughout the

whole assembly process.
2. The Obeya was moved to the production area and adapted to meet the
needs for this phase of the project.
3. The periodic team meetings took place in the production area, with the
machine on one side and the Obeya on the other, as shown in Figure 5.40.
4. Two specialist assemblers were chosen to do the whole assembly, but
they were asked to do so with a critical eye and to point out straight-
away any problem or anomalies, so the team could address them prior
to the production launch.
5. A visual system was set up to monitor every step of the assembly pro-
cess, comparing the time actually spent with what had been predicted,
noting the differences and brainstorming countermeasures when needed.
6. Each major problem was managed with the A3 methodology and dis-
cussed in the Obeya.
7. Every anomaly in the components was immediately jotted down on a
special chart in full view in the Obeya, so temporary measures could
be taken for the construction of the prototype and permanent ones
addressed with the suppliers.
8. The pace of the assembly was monitored constantly and visualized
directly on the chart in front of the machine. Anyone walking by could
see the prototype build status at a glance.
9. The action plans of the whole team were visualized on a large chart
using colored sticky notes for different types of issues.
10. The full action list status was reviewed in the team’ s daily meeting out
on the shop floor.
Figure 5.40 Photo of a progress meeting during the assembly of the prototype.
“ Finally, someone from design group who is in the production department

for the whole duration of the assembly and testing phase ,” was the comment
that emerged as one of the many positive aspects of the experience during
the end-of-project hansei meeting. The close collaboration that took place
during the building of the prototype enabled the rapid resolution of the
problems that arose, and the gathering of very precise and specific feedback
useful for clearly defining all the modifications that needed to be made to
the pre-series machine. It also made possible to drastically reduce the late
changes that had plagued previous projects.
The sharing of information from the very start of the project was
extremely important, enabling the issues and risks of the project to become
immediately obvious before the pieces were designed and built. Obviously,
all of the activities were not simple. For example, various team members
stressed the difficulty of keeping resources focused, completely or in part, to
the project, as they were frequently “ snatched” for other activities. But mak-
ing the management of the whole project completely open and transparent
meant that even resource problems did not remain hidden for long. Rather,
they came to the surface and were solved promptly.
5.3.10 Conclusions
After the assembly and testing phases were completed on schedule, the
CCM48SB Lean was presented at Interpack 2011 fair in Dü sseldorf, Germany,
where it was a great success. In Figure 5.41, you can see the machine
unveiled.
“ Cycle time 1.8 sec,” is prominently displayed on the machine to market
a key selling point of the new series. When the team leader was asked about
the state of the project in June 2011, he said:
The main goals of the project have been fully achieved: cycle time
(we’ ve managed to exceed the target speed without difficulty),
energy consumption (we have reduced energy consumption at
high speeds as well, and by a higher percentage than predicted),
cost (current estimates suggest the cost will be close to the target
figure). It remains to be seen in the field whether we will meet the
other objectives, but at the moment we are confident of doing so.
Besides the project goals, I sense there is a positive attitude to the
machine as a whole, both from the operators who use it and from
the sales people and managers who have to sell it to the market.4
Figure 5.41 The new machine on display at Interpack 2011, Dü sseldorf, Germany.
In the section about the group’ s Beverage Division, the Sacmi 2010
Annual Report states:5
Despite a world economy that is going to return to pre-recession

levels, sales posted by the CLOSURES & CONTAINERS division
exceeded 171 million Euros, an increase on the previous year of just
under 12%. […] the fact remains that our machines are sold world-
wide and are currently used in over 60 nations on five continents.
The year 2010 also saw the delivery of the 1000th compression
machine to one of our most important Taiwanese customers (THC).
A leadership like this is maintened only with a development: the
near-completion of the new CCM48SB, developed by applying Lean
manufacturing methods to our compression machines, is an exam-
ple. If results are in line with expectations, the same process will
gradually be applied to our entire machine range.
The results to date have exceeded everyone’ s expectations, thanks to an

excellent, close-knit team guided by visionary managers.
And now? [… ] And now we carry on! Another fair, the machine to
be installed for field monitoring with clients … . New projects in
the pipeline for the CCMs … the work goes on.
Another continuous improvement cycle begins… stay tuned!

5.4 Continental
5.4.1 Not Enough Time to Develop a New Technology?
Continental is a German company, leader in the automotive tires manu-
facturing and sales. Based in Hanover and founded back in 1871, it is also
one of the world’s five biggest automotive suppliers. Continental employs
approximately 212,000 people in fifty-one countries, with over 39€ billion
of sales recorded in 2016. One of its six divisions, the Powertrain
Division, has a plant in Pisa, Italy, which employs over one-thousand
workers.
The project we developed with a group of engineers at Continental in
Pisa involved a specific application of Lean Innovation principles to the
development of a new production technology. Even if numerical data and
figures have been omitted for confidentiality reasons, the case is quite inter-
esting, because it demonstrates how it is possible to adapt Lean principles to
industrial technology projects and the benefits that can be obtained in terms
of efficiency and overall cost.
5.4.2 The Problem

The Continental plant in Pisa is a leader in the design and production of
fuel injectors for the automotive industry, which can serve world-class cli-
ents like Porsche, Audi, BMW, Mercedes, and PSA. The company was facing
higher costs than expected for one of its most critical components, the high-
pressure fuel injectors. The component is a casing, through which gasoline
is nebulized directly into the engine cylinder. To ensure a regular flow,
together with the geometric and fluid dynamic characteristics, the quality
of the holes has to be so precise that it is necessary to use expensive high-
precision technology. The technology used at the beginning of the project
was Electrical Discharge Machining (EDM). EDM is a production process
for obtaining the desired shape by using specific electrical discharges. The
material is removed from the piece through a series of alternating, high-
frequency current discharges between two electrodes, separated by a liquid
dielectric. One of the electrodes is the “ instrument” or “ electrode,” in this
case in tungsten alloy, while the other is the piece in which the hole must
be made. These holes have a diameter of between 0.1 and 0.3 mm, and
a depth— corresponding to the depth of the casing itself— of between 0.2
and 0.4 mm. The degree of tolerance set for this holes is in the order of a
micron, and, for this reason, it’s very complicated to effectively measure their
compliance in the production environment.
The overall investment in micro-drilling machines capable of satisfying
the estimated production requirements at the beginning of this project had
exceeded ten million euros over four years— just for the production of one
component in the whole injector. Going forward, the working team decided
that there was the need to design a lower cost technology that could meet
the rigorous quality and performance requirements.
5.4.3 Getting Started: Scoping, Goal Setting,

Partner Selection, and Planning
As the Pisa plant did not have sufficient resources to develop new technolo-
gies independently and in-house, the company decided to involve different
partners with the necessary technical expertise and to use the Set-Based-
Concurrent-Engineering process6 to explore various alternatives before
developing a specific technology solution. The big difficulty that the team
were looking for solutions beyond the known boundaries of technical and
economic feasibility. Consequently, the method for evaluating the alternatives
ran up against a lack of objective data with which to confirm or refute the
validity of initial hypotheses made both by Continental technicians and out-
side experts. We, therefore, drew up a full-scale plan of standardized tests
in order to gather, over a reasonably brief period of time, objective elements
to validate (or invalidate) the technical hypotheses as they were formulated.
The project turned into quite a complex case of technological exploration
and innovation involving fifteen different research partners
As cost was the primary goal, the first step was to define the unit of mea-
surement to evaluate the various technology alternatives. Rather than consid-
ering the cost of every single component, a new cost index was defined. It
was characterized by the relationship between the total estimated cost of the
technological investment “connected” with the total estimated lifetime pro-
duction cost.
The index was a ratio between the total estimated investment, including
not just machinery but also the manpower to install it, quality control instru-
ments, all infrastructural expenses, and technical support costs. As for the
denominator, the calculation of the total estimated production cost took into
account all the direct and indirect costs that would be incurred.
The team then set the goal of the project was to halve the cost index
of the current technology within three years, without affecting the quality
of the finished product. If successful, this would translate into sav-

ings of several millions of euros (actual figures cannot be shared due to
confidentiality).
The team that was gathered included technicians from Pisa, product and
assembling process experts coming from plants in US and Germany and inte-
grated with Lenovys consultants.
In defining the scope of the project, three macro areas of research were
considered:
1. Evolution and improvement of the existing technology : to obtain benefits

in the short and mid-term.
2. “ Hybrid” technology, combining existing and new technologies : to
obtain benefits in the mid and mid-to-long term.
3. Development of a completely new technology : to obtain benefits in the
mid-to-long term.
Various solutions were explored for each of the three areas using the
principles of Set-Based Concurrent Engineering to lead the team to the best
solution(s).
5.4.4 The First Steps: Analysis of the Current

Situation and Competitive Benchmarking
Two types of initial screening were conducted— one internal and one exter-
nal. Analyzing the current processes’ capabilities (Figure 5.42) and the total
costs, the internal screening resulted in short-term improvement actions, but
also some useful ideas for the mid-to-long term development other technol-
ogy solutions.
In particular, it yielded ideas for reducing the overall erosion time thus opti-
mizing several process parameters. Analysis of the data and a profound under-
standing of the technical processes produced ideas useful for the evolution of
the existing technology, such as introducing mechanisms capable of neutraliz-
ing various existing limits and giving rise to so-called hybrid solutions.
The analysis of the existing technologies on the market for producing
micro apertures permitted a totally “ out of the box” approach offering inno-
vative ideas, despite the strict technical specification needed for the product.
The technological concepts chosen to explore can be seen in Figure 5.43.
In order to see which partners to involve in the project, meetings
were held several suppliers and research centers, each of which provided
EDM process time map

load/unload position total feeding dressing total erosion time w/o dressing
23%
12%
7%
4%
54%
Figure 5.42 Chart of process times for the EDM technology at the start of the
project.
Figure 5.43 Example of existing technologies for producing micro apertures.
demonstrations of their potential technology and the results of pre-test

activities before being “ officially” admitted into extended test phase to col-
lect specific quality and performance data for the given application.
5.4.5 Project Review System and Test Activities Standardization

The project was managed with the Project Review System, with particular
care being taken to ensure a set pace and rhythm for the various project
Figure 5.44 Diagram of the general convergence process, with the identification of
initial partners for the generation of alternative solutions.
activities in order to allow a steady convergence to the final choice. A key

deadline was fixed for each of the five phases (Figure 5.44), by which time
the “ salient features” of the project, the so-called key deliverables, were to
be completed and documented. The activities required to achieve them were
done by detailed planning charts drawn up directly by each partner respon-
sible for the given deliverables. The progress status of each concept was
followed using status A3’ s.
The project was divided into the following phases:
1. Project scoping and scheduling . Defining and agreeing the customer

(performance, characteristics, and quality) and business (costs, restric-
tions, timing, and resources) goals.
2. Exploration and selection of the different concept alternatives . This is

the phase that required the maximum technical effort to explore the
proposed solutions including the testing and evaluation of prototypes
developed during different convergent steps.
3. Development of the technical and industrial concept. After the selection of
the solutions deemed potentially valid for mass production, the next step
requires the development of the technological concept: plants, equipment,
specifications, and manufacturing processes. For this kind of project three
or four possible alternatives remain “on the table” during this phase.
4. Assessment of the technical reliability of the solution . Phase of applica-
tion tests to evaluate the technology and the product in the customer
configuration.
5. Final technical approval . Production of the technical specifications and
of the other documents needed for the start of purchasing and industri-
alization phase.
The Project Review System used for the project is shown in Figure 5.45.
Figure 5.45 Project Review System excerpt.

One of the most difficult parts of the entire project was to establish
objective technical parameters to evaluate the true value of the proposed
ideas and solutions. Given the need to technically evaluate the quality of
one technology as opposed to another, we immediately realized that we
had to gather together and process an enormous amount of data. A standard
methodology was introduced to manage the information flows from all the
partners to provide standardized data in standard formats with the aim to
compare effectively the different proposals. Without this standardization, it
would have been impossible to objectively and consistently evaluate, in just
four to six months, almost one hundred different tests made by fifteen part-
ners. Some of the information that was standardized included:
1. Pre-test data used for the initial selection of technology/supplier

2. Prototypes and documentation used extended testing
3. Extended testing procedures and results
4. Technical validation and technical plant specifications
The testing activity, summed up in Figure 5.46, was standardized in order

to avoid wasting time and money due to unforeseen eventualities and ambi-
guities in the operative process. Aspects such as the number of samples to
deliver, the type of “ template” to use, sender and delivery addresses, the list
Figure 5.46 Chart of standard flows and formats for the test activities.
of data to be gathered for each test, the kind of master to employ, and so
on, were all clearly laid out.
The preliminary standardization of the tests made it possible to collect
and process large amounts of data without any great effort, because the
initial work to define the flow eliminated much of the discontinuity and
loss of time that typically arises during this phase. The standards pushed
the Continental technicians to be very clear in their own minds about
what to ask of the suppliers, but above all, it brought out in advance all
the possible questions that the supplier would then have to find answers
for in the technological preparation and execution of the various tests. It
also helped to speed up and facilitate communication, given the objec-
tive language difficulties that inevitably arose in a team made up by
German, French, Italian, American, Swiss, and English engineers. In this
way, the technical meetings took place without the need to spend a lot
of time re-discussing and re-aligning expectations. This made it pos-
sible to focus on key technical issues and risks rather than contractual
deliverables.
5.4.6 Set-Based Concurrent Engineering put to

the Test: The Evaluation Matrix
Even if the data collection for the evaluation of the single alternatives was
standardized and accelerated, the screenings of alternatives were discussed in
depth and reviewed using a standardized evaluation matrix. While apparently
simple, it was actually very complex due to the need to explore twenty-nine
different solutions, described by forty different parameters. Considering that
thousands of casings were drilled and tested during the exploration phase,
this meant that about five-thousand individual measurements were done in
total. The matrix was developed with the collaboration of Continental engi-
neers, who skillfully adopted the classic concept of the hierarchical multilevel
evaluation matrix often used for comparing alternative solutions through the
assessment of different characteristics, weights, and importance. In this case,
we considered four different factors for each alternative:
1. Values from objective data: geometric measures, statistical dispersion of

the measures, cycle times, number of defects, etc.
2. Values from objective facts: photographs obtained by means of an elec-
tron microscope for detecting the presence of burrs on the edges of the
holes or of cracks, the extension of thermally modified areas, etc.
3. Values from objective total costs: official cost quotations, labor and tech-
nical assistance requirements, etc.
4. Values from subjective evaluations: technical risk assessments, feasibility
estimates, supplier capability and flexibility, ease of access to know-how
for solutions, and other strategic considerations.
A weight has been assigned to each characteristic, with a well-defined

scale of evaluation in order to come up with an objective and standardized
rating for each alternative. The result was an overall ranking that took into
account all the factors. Figure 5.47 shows an example of a portion of the
standard evaluation matrix that has been used for the project.
5.4.7 Trade-Off Curves

The evaluation carried out during the analysis enabled joint consideration of
cost, quality, and several industrial performance variables. In order to more
clearly picture and compare their relative impacts with regards to the vari-
ous technical and economic variables, the key trade-offs were represented
Figure 5.47 Part of the evaluation matrix for the twenty-nine alternative solutions.
by graphical means to assess the sensitivity of certain factors with respect to

others. An example can be seen in Figure 5.48.
5.4.8 Chosen Solutions and Conclusions

Three solutions were ultimately chosen for the advanced testing phase. All
of them met the criteria established at the beginning of the project: the
first was the most innovative and promising in terms of economic benefits;
the second was intermediate in terms of risk and benefits; and the third
was industrially more conservative than the first two, albeit markedly more
advanced in its development.
More analyses and development work were done in parallel for the 3
solutions. For example, in the diagram shown in Figure 5.49, you can see
a microscope view of the quality of the micro-hole obtained by one of the
chosen solutions.7
This research project shows how it is possible to find innovative solutions
to a complex problem in a relatively brief period of time while coordinat-
ing a large number of resources, with the aim to achieve significant eco-
nomic benefits using Lean principles in the conceptual phase. These Lean
6,00
5,00
4,00
Investments
3,00
2,00
1,00
0,00
60,00% 65,00% 70,00% 75,00% 80,00% 85,00% 90,00% 95,00% 100,00%
Quality
Figure 5.48 Example of trade-off curve for the comparative evaluation of the differ-
ent solutions.
Figure 5.49 Electron microscope photos of the holes obtained with one of the three
chosen solutions.
principles were the enablers to guide an “ enlightened” management team

and an extremely competent and highly motivated group of engineers to
overcome challenges that seemed insurmountable at the time.
As of now, the Pisa plant appears to have weathered the recessionary
storm that hit the European automotive industry in 2009– 2011. Thus dem-
onstrating that innovating in periods of cost-cutting crisis is not only pos-
sible, but it’s also the best way to not only survive but to reach a position of
industry leadership in one’ s sector.
5.5 PSA— Peugeot Citroen: Applying

Set-Based Concurrent Engineering
5.5.1 Introduction
One of the key principles of Lean Product and Process development noted
by Liker and Morgan (2006) is that of “ Front load the product development
process to thoroughly explore alternative Solutions while there is Maximum
Design Space .” One of the key methodologies to do this is the approach of
Set-Based Concurrent Engineering (SBCE) that was first described by Dr. Al
Ward.
There are really two different approaches to design. The traditional

approach (Figure 5.50A), implemented by the vast majority of engineers, is
the iterative model. The problem with this approach is that we only tend
to look at a few concepts because of time, budget, resources (or all of the
above). Consequently, we tend to down-select to one concept fairly quickly
and will very likely have many iterations and changes during the develop-
ment and industrialization phases before meeting the overall requirements.
With the Set-Based approach (Figure 5.50B) described by Dr. Al Ward, we
explore the design space more thoroughly by generating many feasible alter-
natives at the subsystem/component level, we evaluate the concepts relative
to risks and goals and we combine those subsystem/components alternatives
to evaluate different system-level options and gradually to converge to the
optimal system-level solution. That optimal concept is then developed, vali-
dated, and industrialized in a shorter period of time with less rework.
While many companies do spend time generating alternatives, very few
spend sufficient time to systematically explore alternatives in the early stages
while the design is still fluid and it can be best optimized. There are several
reasons for this including costs (it is often mentioned that it might seem a
waste to invest on a project that is not yet approved or for which we are not
sure it will go to market someday), time pressures, and lack of clarity in the
voice of the customer. However, as we will see in the following case study,
the Set-Based approach can be done with only a slight increase in resources
upfront while saving much more time in the latter phases of a project.
Figure 5.50 (A) Iterative model and (B) Set-Based Concurrent Engineering model.
PSA Peugeot Citroen started their Lean Product Development journey in

July 2007. In their first year, it became clear more front-loading, explora-
tion, and evaluation of alternatives was necessary to develop more robust
products in a timely manner. While exploring multiple design alternatives
was not new to PSA, the process of exploring, evaluating, and optimizing
design choices was not always efficient leading to late changes and tight
deadlines.
While some groups at PSA already claimed to be “ Set-Based,” several
in the company were not so sure. In the spirit of Lean, one engine team
working on the development of a brand-new generation of engines decided
to give a try using the more systematic approach of Set-Based Concurrent
Engineering and to see how it would work at PSA and see its potential ben-
efits compared to how they had done projects in the past.
5.5.2 SBCE Approach

5.5.2.1 Set-Based Concurrent Engineering—Scoping: What
Is Value-Added? Where Do We Need to Search?
Set-Based Concurrent Engineering obviously has to be done in the early
phases of the project while the design is still fluid. To begin, the team
needed to have a clear understanding of the voice of the customer regard-
ing the product’ s performance. They also needed to clarify the voice of the
business with regards to cost and project timing. By knowing the voice of
customers (VoC) and the voice of business (VoB), they were in a better place
to know what ranges they had open to them to explore and what key trade-
offs would need to be considered during the convergence phase.
Based on the findings, the team realized that they needed to explore
around five specific functional areas of the engine in order to meet the cus-
tomer and business needs. It is important to note that rarely will you need
to explore all facets of a given product design. Part of early scoping is to
determine which parts of the design can we re-use (or slightly modify) and
which parts do we truly need to find new innovative solutions to meet the
customer’ s needs.
Experts for each of these functional areas participated in the project to
ensure that the design space was thoroughly explored, and that past learn-
ings could be leveraged in evaluating alternatives.
5.5.2.2 Set-Based Concurrent Engineering— Initialization Workshop

While the convergent process, when done well, will usually take several
months, it is recommended that teams starting out on their Lean journey with
SBCE begin with an initialization workshop. The goals of the workshop are:
◾ Train the team in the SBCE methodology.

◾ Orient the team to begin exploring in the correct design space.
◾ Begin the convergence process so that all team members are aligned
and converging in the same direction.
◾ Create an agreed-upon convergence plan to meet the overall project
timing.
Most initialization workshops last two to five days depending on the

scope and complexity of the product. In the case of this engine project, the
workshop was done over three days.
5.5.2.2.1 Phase 1: Clarify the Voice of the Customer

From the preliminary scoping, the chief engineer should provide the team
with the key needs of their customer. In the spirit of Lean, keep it simple.
The Voice of Customer should be kept to a small number of key criteria
they will be used later to evaluate. If too many “ voices” are present, it will
be difficult for the team to effectively evaluate alternatives and meet the key
needs of the customer. As the Greek proverb says: “ When two roosters sing
at cockcrow, the sunrise might be delayed.”
The customer needs typically include key performance characteristics,
quality requirements, and cost targets. Ideally, the targets should be expressed
in ranges in order to give the team the maximum area of design space.
5.5.2.2.2 Phase 2: Exploration of Alternatives

In this phase, the team is divided into subgroups by their respective dis-
ciplines. The subgroups, search for alternatives from various perspectives
(technical, industrial, styling, etc) that:
◾ meet the customer needs;

◾ are feasible from the point of view of the technical discipline.
In traditional brainstorming, we would have the entire cross-functional

team do a group brainstorming. However, experience has shown that it is
better in the beginning of the exploration phase that the engineers do some
independent studies of what is possible from their perspective. It has been
shown that this approach is the best to accelerate the time to explore alter-
natives and helps by opening up the opportunity to learn from looking at a
whole set of possible alternatives proposed by all groups simultaneously.
Each alternative is documented on an A3 (Figure 5.51) that includes: a
description of the concept, a sketch (if relevant, but highly useful), and the
relative pros and cons. In the case of the engine project, five teams gener-
ated a total of 130 concepts that could potentially meet the customer needs
and found that seventy-one of these concepts were technically feasible to
present to their peers.
5.5.2.2.3 Phase 3: Presentation of Alternatives and Feedback

Each subgroup presented their alternatives to their peers for feedback. The
other subgroups asked any questions to clarify the concepts being presented
and then provided feedback on its feasibility relative to their design choices.
The feedback was posted on the wall on a Venn-type diagram (Figure 5.52).
A scribe also documented all the alternatives and feedback in a spreadsheet.
It is important to note that the team did not “ throw away” any solutions.
Rather, keeping solutions that have been eliminated in a designated reposi-
tory (e.g. Books of Knowledge), as they may be applicable to future projects.
Going through the SBCE process in itself increases teams’ overall knowledge
of the design space that will obviously be useful for further projects.
Figure 5.51 Example A3 template for concepts.

Figure 5.52 First convergence of feasible alternatives (due to drawing constraints,

the center area here, was located in the upper left part of diagram).
5.5.2.2.4 Phase 4: Quantification of Remaining Alternatives

The team members then returned to their subgroups to better quantify the
remaining alternatives. The quantification (actual numbers are not displayed
for proprietary reasons) was based on the following criteria:
Voice of Customer needs which included:
◾ CO2 emission level

◾ Fuel efficiency
◾ Cost.
At this point, other constraints from a technical and business perspective

were also introduced into the analysis. These included:
◾ Mass
◾ Packaging
◾ Meet project timing.
The above customer needs and constraints were the basis for the teams
to begin taking into account the key trade-offs in the design alternatives.
Based on the analysis at this point, the five subgroups had converged to a
total of twenty-six alternatives as shown in Figure 5.53.
Figure 5.53 Convergence after subgroup analyses.
As we can see in the figure above, some teams had gradually converged
and still had several alternatives whereas other groups had rapidly con-
verged into only one alternative. At this point of the process, it became clear
that some groups were down-selecting too quickly and without sufficient
data to support it. One of the key principles of SBCE is to keep the alterna-
tive in the set until there is factual data to support it being removed from the
set of alternatives— “ Innocent until proven guilty.”
5.5.2.2.5 Phase 5: Additional Brainstorming and Review

“ Risky” Alternatives that Should Re-enter the Set
Based on the analysis in phase 4, it is recommended that subgroups step
back at this stage to brainstorm additional alternatives and/or review the
alternatives that were not “ in the center” but close to the center of the Venn
diagram. (i.e. those alternatives where only one or two groups had some
reservations). The subgroups should review innovative yet riskier solutions
that have high potential:
◾ To meet or exceed customer needs

◾ Have risks that can be mitigated
◾ Can be explored in the timing of the project.
Figure 5.54 Convergence + re-entry of risky yet innovative solutions.
The subgroup should negotiate with subgroup(s) that had reservations on

the proposed concept to:
◾ Identify/quantify concern
◾ Propose risk mitigation(s) (as a key success factor for future activity) or
modify the concept
◾ Estimate timing.
The subgroups can then collectively determine which alternatives should

re-enter the set of alternatives to carry forward.
In the case of the PSA engine project, the subgroups identified a total of
ten “ innovative” solutions (Figure 5.54) that had potential worthy of keeping
them in the set a while longer.
5.5.2.2.6 Phase 6: Identify Backup Solution

At this stage, subgroups began identifying their backup solution. The backup
is the alternative that is the low-risk alternative where the team has a high
degree of confidence that it will work within the overall system even if it
may lack some of the requirements. The backup solution is essentially the
“ 80% solution.” In some cases, it may even be the existing component or
subsystem. The backup is introduced as a safety net that allows the teams
to simultaneously and confidently pursue both radically innovative solutions

and a more conservative solution to mitigate the risk of potential engineer-
ing failure.
5.5.2.2.7 Phase 7: Create Schedule and Action Plans

to Complete the Convergence Phase
At this point, the team had narrowed down the alternatives as best they
could in the initialization workshop. Now they needed to look at how they
would analyze and evaluate alternatives through the remainder of the proj-
ect. To do this requires the following:
1. Note the potential risks associated with each alternative.

2. Identify what minimum actions would be needed to prove (or invali-
date) the feasibility of each alternative. Who will do them? When can
we expect to know the results?
3. Managing the convergence by evaluating the value of actions (i.e. bal-
ancing the need to know or the need to learn further, with the need to
decide based on the project timing).
4. Create the convergence plan that aligns with the overall project plan.
The convergence plan at a minimum should include:
a. Integration events— when will we integrate the various remaining
alternatives to see their overall system-level feasibility?
b. Final decisions (cut-off dates)— when will we need to make the final
choice for each subgroup?
Figure 5.55 provides an illustration of a convergence plan.
5.5.2.3 Convergence Phase

As was mentioned, the workshop is only the beginning of the convergence
phase. In the convergence phase itself, there are several activities that the
project manager (system integrator) must do to guide the design to the opti-
mal solution.
First week after the workshop :
1. Communication to all affected members of the team and key stakehold-

ers who were not part of the workshop. The communications should
include decisions made, concepts still in play, action plans, and timing
for convergence.
Figure 5.55 Example of a convergence plan.

2. First meeting with subgroup team leaders to confirm/expand action
plans and timing.
Weekly meetings:
System integrator should meet with the team on a regular cadence to:
1. Follow up on action plans.

2. Facilitate scheduled integration events.
3. Ensure decisions are made at the right time to ensure that they meet the
cut-off dates established by each group.
The integration events are critical to making sure that the teams evaluate
the combination of alternatives so that decisions can be made at the right time.
5.5.3 Conclusions
During their Lean journey applying Set-Based Concurrent Engineering, the
teams at PSA learned that there were several elements that were important
to making the convergence phase effective. The key success factors include:
1. All disciplines respect decisions made by the team.

2. Resource planning (people and budget) to front-load the exploration.
3. Alternatives stay in the set until there is data to support eliminating it
(i.e. keep the funnel open as long as possible).
4. Avoid going back to second-guess or re-explore solutions already
eliminated.
5. Document all solutions that have been explored during the project in a
designated repository (e.g. Books of Knowledge) as they may be appli-
cable to future projects.
6. Decisions are made when specified in the convergence plan (not later
or earlier).
The engine team who went through the SBCE process saw several ben-
efits of using the process including:
◾ The ability to explore and evaluate more solutions more rapidly.

◾ Improved collaboration between functional groups.
◾ A better and faster consensus on decisions made.
◾ Limited late changes.
As a corollary to the case study, during the convergence phase, the team
had an unexpected change to the project requirements that came about from
the government regulatory requirements. While this did cause the engine
team to change the design direction on some subsystems, the system inte-
grator said it was it was great that they had used SBCE. Why?
“ Had we simply done our traditional approach of looking at a few

solutions and picked one to design early, we would have spent a lot
of time iterating to find a new feasible solution. With SBCE we had
thoroughly explored the design space, we knew exactly which solu-
tions we had already examined that were at one time not feasible
which now needed to re-enter the set so we did not have a lot of
perturbation to our development plan.”
Since the case study presented above, the PSA team has used the SBCE
approach on several other projects. They have also begun to incorporate the
methodology into their core product development process. However, they
are still learning and refining the methodology to fit their various product
groups. As the engine project shows, the SBCE approach is a strong Lean
methodology that can help teams improve the strength and speed of their
product development process.
Acknowledgments
Special thank you to the PSA teams for sharing their experiences on SBCE.
In particular, thank you to Olivier Soulié from the PSA R & D Excellence
System for providing interesting insights and collaboration in providing con-
tent for the case study.
5.6 Lamborghini
5.6.1 Applied Research and Bold Product Innovation
In collaboration with Luciano De Oto8
The history of Lamborghini is an interlocking chain of challenges and
innovation.
But what does being innovative really mean?
Sometimes it means starting from existing products and trying to
improve them, as company founder Ferruccio Lamborghini did in the
famous clutch story. Before going too far, let’ s step back for a minute and
look at the company’ s history. At the end of the 1940s, having served as
a repair mechanic in the air force in the Second World War, Ferruccio
Lamborghini embarked on an entrepreneurial career as a tractor manufac-
turer. He bought up surplus military vehicles and turned them into agri-
cultural machines. In 1948, he founded Lamborghini Trattori, which, in the
1950s and 60s, became one of the largest agricultural machinery manufac-
turers in Italy.
In 1961, Ferruccio bought a Ferrari 250 GT for his second wife, but the
car had a very rigid clutch. He then bought a second Ferrari, a 250 GT2
Plus, the bodywork of which was also designed by Pininfarina, but this
too had a stiff clutch. So he dismantled the clutch in his workshop, only
to find that it was the same type as the ones used for his tractors. Bitterly
disappointed, he went to see Enzo Ferrari, an old friend, and said:
I pay you all this money, only to find I have a tractor clutch fitted
in the car?” And that was the start of their rivalry, because Enzo
Ferrari answered: “ You go off and make tractors and leave me to

take care of the sports cars.
This is also when his desire to innovate started. He got cracking straight
away, because the 350 GT, the first model of the newly established “ House
of the Bull,” had many innovative features and was superior to the Ferraris
of the time. Presented at the Turin Auto Show of 1963, it was the first of
many memorable Lamborghini models to come. Located since the beginning
in Santa’ Agata Bolognese, Italy, and owned since 1998 by Audi, Volkswagen
Group, in 2016 Lamborghini reached for its first time the record revenue of
906 million euro, with 3.547 sold vehicles achieving its sixth consecutive
increasing year.
Today, after many successes, Lamborghini has set itself a fresh chal-
lenge and embarked on another journey of innovation. It wants to be the
world’ s most avant-garde car manufacturer in the integral application of
carbon fiber for the manufacturing of automobiles (Figure 5.56). Why? The
key parameter of super sports cars is the weight-to-power ratio, and so,
given the emissions regulations that place a limit on how much power can
be increased, it is necessary to work on reducing weight. The extensive
use of carbon fiber, also at a structural level, has already put Lamborghini
into the lead, and it wants to continue distinguishing itself with respect
to the competition. It is, then, a crucial technology for the super sports
cars of the future, increasingly light, lower fuel consumption, and low CO2
emissions.
Minimize costs
Agreement Building Block Approach
and development
with Boeing
time
Creation
New research
center ACRC
Inspiration from
Minimize New Forced Composite
the aerospace
weights materials
industry
New inside
RTM Lambo
Produce inside processing

center CFK
Figure 5.56 Fiber carbon development program at Lamborghini.

5.6.2 The Sesto Elemento, a Laboratory of Excellence

The Research and Development center has always been one of the com-
pany’ s most active departments: new technologies are being studied all the
time, technologies designed to guarantee and improve the performance
characteristics of the cars and, at the same time, to meet the required envi-
ronmental standards. In 2008, a laboratory was set up in Seattle, where
research is currently underway into carbon fiber-based technologies. The
project is being run in conjunction with two prestigious partners, the
University of Washington and Boeing.
Lamborghini’ s engineers and technicians actually began to explore com-
posite materials in 1983, with the first applications on some Countach com-
ponents. Since then, the know-how within the company has grown steadily,
leading to the establishment of the Sesto Elemento technological laboratory
(Figure 5.57).
The Sesto Elemento’ s name is a reference to the atomic number of car-
bon, in recognition of the car’ s extensive use of carbon fiber. Presented at
the Paris Auto Show in 2010, just twenty Sesto Elemento vehicles have been
produced and sold, used exclusively on racetracks for evaluation purposes.
Reported prices range from US$2.2 million to US$2.9 million. At the time, the
Sesto Elemento was the most expensive Lamborghini ever created.
Figure 5.57 Luciano De Oto, in the center, with members of the Sesto Elemento
team.
Figure 5.58 Rendering of the Lamborghini Sesto Elemento.

The Sesto Elemento (Figure 5.58) is a Technological Demonstrator and
represents the future of super sports cars, in line with the Lamborghini
philosophy that handling and acceleration are increasingly important, and
will become even more so in the years to come, on a par with a stylish
design.
An exceptional power-to-weight ratio of just 1.75 kg per HP permits
unequalled performance levels: from a standing start, the Sesto Elemento
can reach 100 km/hour (62mph) in just 2.5 seconds.
These values are made possible thanks to an innovative structure
made entirely of carbon fiber, which uses technology co-developed by an
American supplier and with Callaway, the world’ s biggest golf club manu-
facturer. The new patented material, called Forged Composite, possesses
a number of innovative characteristics: it has excellent structural proper-
ties, and so can be used to construct high load-bearing components. It is
also revolutionary in terms of the production process, as it can be molded
in a little less than three hundred seconds, a much shorter time than that
employed for standard lamination processes for composite materials.
Above all, however, it offers a huge advantage: weight. Through this tech-
nology it is possible to obtain a material that has the same structural proper-
ties as aluminum in a much shorter production time (Figure 5.59).
Having achieved great savings on the hours of production, the cur-
rent focus is on reducing the cost of the raw material, because the price
of carbon fiber is by no means comparable to that of aluminum. The great
Figure 5.59 3D CAD view of the Forged Composite “ tub” (occupant cell) of the
Sesto Elemento.
advantage of carbon fiber, and the reason why it can be considered revo-
lutionary in auto manufacturing, is that it is possible to significantly reduce
manufacturing time compared to traditional metallic structures, given that
Forged Composite can be molded in less than five minutes.
5.6.3 Frontal Impact Absorption

The material is not the only innovation. The Sesto Elemento also employs a
new concept for absorbing the forces released in a frontal impact, different
from those of a traditional aluminum or steel chassis. The geometric prop-
erties of the composite can be exploited due to a greater specific energy
absorption.
While for metallic materials the section that reacts better to compression
is generally a closed section, this is not the case for composite materials.
Indeed, closed sections are the ones that perform worst. In the quest for
knowledge, a number of sinusoidal geometries have been studied to further
reduce weight while maintaining the desired energy absorption capacity
(Figure 5.60).
Also new is the concept for fixing the front frame to the “ tub.” It derives
from our learnings from the aerospace industry, and it has been introduced
for the first time into the sports car industry. Normally, drilling a hole in a
carbon fiber frame produces delamination effects that are hard to control
during the product’ s life cycle. In this case, given the material’ s very low
sensitivity to cutting, a way was found to pierce it and to use aerospace
rivets, the same ones used on the Boeing 787, rather than typical metal
inserts.
Figure 5.60 The Sesto Elemento chassis under construction.
5.6.4 Aventador: The Industrialization of

the Product in Carbon Fiber
The challenge of industrializing the production of a chassis in carbon fiber
was inspired by Lamborghini’ s thirty years of experience in the use of com-
posite materials, but also by Audi’ s drive toward the construction of light
chassis. In fact, Lamborghini has been part of the VW Group since 1998,
and the German manufacturer’ s propensity for using light materials in the
structure of car chassis has given impetus to the development of a new pro-
duction process. The craft operations required of the skilled workers were
thus optimized in relation to an automatization of the working of the carbon
fiber, the end result being to produce a monocoque complete with roof and
struts. One consequence of the new way of making the carbon shell lies in
the style of the Aventador, developed in 2011 based on the Sesto Elemento.
The two projects have a fundamentally different philosophy: one is for a
select few— about twenty cars in all, for VIP customers; the other one, the
Aventador, occupies a lower product band, albeit at the top end of the range
for its segment.
The Aventador project is distinguished by taut lines and deep tornado
lines on the sides, and is not subject to the severe limitations associated with
the processes for working the composite. An example of this is the lines
of the roof, which have sharp edges that do not produce problems in the
manufacturing phase (Figure 5.61).
Figure 5.61 The new Lamborghini Aventador.
Thanks to important partnerships with companies that have worked suc-

cessfully with these materials for years, such as Boeing and Callaway Golf,
the process of producing the composite has reached a level at which it can
be supported and managed in the company itself.
That is why, although the use of carbon is not new in the automotive
industry, it can confidently be stated that a great step forward has been
taken in the evolution of the manufacturing technique.
In particular, the agreements signed between Lamborghini and Boeing
in recent years has enabled the company to benefit from concepts such
as the Building Block Approach (BBA), and to learn new ways of doing
things, and to gain preferential access and to raw material suppliers. This
has permitted the industrialization of a highly complex process capable of
creating the Aventador’ s monocoque, which weighs just 147.5 kg and can
boast a torsional rigidity coefficient of 35,000 Newton meters per degree
(Figure 5.62).
Figure 5.62 The carbon fiber monocoque.

The BBA is a development process elaborated by Boeing and adapted
to the auto industry by Lamborghini built with the aim to calculate the
quantity of material, the arrangement of fibers, and various other param-
eters on the basis of project requirements. The process is only possible
with the use of composite materials because both forms and resistances
can be molded. This has made it possible to obtain an object— the mono-
coque— that offered perfect safety and dynamics from the very first proto-
type, unlike what used to happen in the past, when a “ crash” development
of a steel composite component required corrective measures in the form
of “ patches,” which inevitably added weight to the structure and affected
the dynamic performance.
5.6.5 Building Block Approach

The BBA approach consists of the progressive alignment between test activi-
ties and the simulation model, starting with the basic material samples and
working through to a model on a 1:1 scale, gradually increasing its geomet-
ric complexity (Figure 5.63).
The advantage that can be gained is a validation and certification phase
limited to a single test (level 5), in that the simulation model is 100% reli-
able. This process was reused by Lamborghini for the monocoque of the
Aventador (Figure 5.64).
In Lamborghini’ s BBA pyramid, each of the five levels is a “ gate” to get
through after having completed all the required activities (Figure 5.65).
Components
Sub - components
Elements
Drawings eligibles with samples
Qualification of the samples of the materials
Figure 5.63 Diagram illustrating Boeing’ s Building Block Approach (BBA).
Figure 5.64 Lamborghini’ s adaptation of the BBA.
Car
completed
Complexity
Main modules
Parts list
Parts
Qualification of the
samples of the materials
Number of test
Figure 5.65 Methodological steps of the BBA approach.

1. The goal is to generate the model of the material with the “admissibili-
ties” for traction, compression, and cut, and represents the real (not nomi-
nal) processes of production, including the effects of damage/yield.
2. The aim is to calibrate the model with greater geometric complexity.
The material modeling parameters are regulated in accordance with
experiments.
3. Validate the modeling of the materials: the scale model is assembled at
this stage.
4. Evaluate performance and the absorption of energy of the mono-
coque’ s structure on the lateral bracket. Supplies data for calibrating
the crash model.
5. Performance of a dynamic crash test on a 1:1 scale vehicle.
The number of tests is reduced as we climb the pyramid saving time and
cost.
In fact, when the test was performed on a 1:1 scale, the simulation model
was so accurate that it proved to be 100% reliable, and the test was passed
on the first attempt. This made possible to make great savings (cost and
time) in the development phase relative to the traditional method, used by
competitors, which tends to involve doing the crash test, failing it, apply-
ing patches, redoing the test, further failure, and so on. The result of these
traditional continual additions is an increase in weight. By contrast, in the
Lamborghini approach, you start with a base weight, which then continues
to fall as the development process evolves.
5.6.6 Advanced Composite Research Center

Another important element to increasing innovation was the opening of
an in-house Advanced Composite Research Center (ACRC), which studies
the development of technologies and their optimization on the costs and
production volumes basis. The center’ s work runs in parallel with studies
carried out by Boeing and university research financed by Lamborghini.
One very important issue regarding composites is repaired. This is man-
aged entirely by the ACRC, which guarantees and certifies the quality of
repair work by using techniques derived from the aerospace industry. As
Boeing does with its planes, specialized technicians known as “ flying
doctors” go directly to dealers. They have the necessary skills to repair
damage to the monocoques, and to restore the vehicle to its original state
(Figure 5.66).
Figure 5.66 A flying doctor in action.
5.6.7 Innovative Processes

The lower section of the Lamborghini Aventador’ s monocoque is produced
using RTM (Resin Transfer Molding) Lambo technology, which involves
manual preforming of the fiber which then comes into contact with resin
injected at low pressure, while the upper and perimeter sections are made
with Pre-Peg technology; this involves the use of fiber soaked in epoxy
resin. These lines are flanked by the foam line, which works on the foams
that are used to fill cavities in order to increase the torsional inertia of the
structure. Great attention was also given to positioning and installing alumi-
num flanges in the monocoque; these support the front and rear sub-frames,
on which the suspension, engine, and secondary components operate
(Figure 5.67).
Figure 5.67 Material composition of the monocoque.

Figure 5.68 Flow diagram of the new Lamborghini CFK department.
The processes were designed together with the product, and this syn-
ergy gave rise to the new production center (CFK) for composite materials
(Figure 5.68). Talking about the production and industrialization processes,
the introduction of this technology was also made possible by reducing
the time required to produce the monocoques. At present, it takes 130
working hours to produce a monocoque, which is perfectly in line with
the need to build an average of 4.5 cars a day, with annual production
that may in any case vary on the basis of orders between 700 and 2000
vehicles a year. Rapid progress is currently being made toward achieving
maximum production speed, optimizing manufacturing and assembly pro-
cesses, and reducing waste.
5.6.8 RTM Lambo

While the composites traditionally used in the luxury sports car industry
have always been aerospace-derived presoaked fibers with autoclave polym-
erization, processes that do not involve the use of the autoclave, like the
Resin Transfer Molding (RTM) technique, are now considered more efficient
in terms of cost and production, with performance and quality remaining
Figure 5.69 Photos of the RTM Lambo process.
essentially the same. To satisfy all the requirements of the RTM process,
the resin needs to have a very low viscosity, an adequate pot-life,9 and a
good fiber impregnation capacity. In addition, it must be able to deliver the
mechanical properties necessary for guaranteeing the resistance and tor-
sional rigidity of the monocoque.
This is the new patented RTM Lambo process (Figure 5.69).
In order to increase the performance of the Aventador monocoque, sec-
tions containing epoxy foam were introduced in order to obtain the desired
geometries without adding unnecessary layers of carbon fiber.
5.6.9 Conclusions
In the last two years, Automobili Lamborghini S.P.A. has registered eleven
patents, clear proof of the great changes introduced thanks to the humble
approach taken in relations with the aerospace industry, the main source of
inspiration (partnering with Boeing).
In order to innovate at Lamborghini, great attention is paid to the follow-
ing aspects:
◾ Development processes (time and cost reductions)

◾ Manufacturing processes for enhanced flexibility (setting up a new
department)
◾ Product (use of new materials, unique styling studio)
◾ People (consolidation of a collaborative attitude at all levels, acquisition

of necessary know-how, and establishment of a new research center and
creation of long-term relationships with the University of Washington)
◾ Tools (application of the BBA and introduction of new calculation systems)
◾ Protection of know-how through the strategic decision to keep the whole
development process and the production of composite materials in-house
All those elements are the basis for the on-going challenge of finding
new technical solutions to earn ever-greater customer satisfaction, ensuring
at the same time a reduction in production costs. Special thanks also goes
to the support offered by the Lean coaching and consultancy of Lenovys
that helped us apply Lean processes and tools that enabled the innovations
we discussed above.
5.7 The Natuzzi Case— Relaunching a Company

Starting from Its Products
With the contribution of Gianluigi Bielli and Lorenzo Lucchesi
5.7.1 The Company and Its History

The Natuzzi Group, founded in 1959 by Pasquale Natuzzi, is an Italian
industrial group specialized in the production and sale of sofas, arm-
chairs, furniture and furnishing accessories for residential use. The Natuzzi
SPA Holding has been listed on Wall Street since 1993. The family Natuzzi
still holds over 61% of the shares today. With 90% of production exported to
123 markets, Natuzzi holds the largest market shares in EMEA with 45.2%
and in the Americas with 41.8%.
The Group makes its products inside its horizontally integrated produc-
tion sites in Italy, China, Brazil, and Romania. Natuzzi controls 92% of raw
materials and semi-finished products, and 82% of services.
The distribution network has been developed around 390 Natuzzi single-
brand shops. The turnover as of December 31, 2016 recorded € 457 million.
Natuzzi Group employs 5171 people (2016).
Its commercial offices are located all over the world, and some of them
are in fact unique constructions, like the one in Figure 5.70, which is the
commercial headquarters in High Point, North Carolina, designed by archi-
tect Mario Bellini, where there is also one of the largest and most important
Figure 5.70 Natuzzi Commercial Headquarters in High Point, North Carolina.

shows in the furniture sector, during which all new models are presented
annually.
The founder and current owner has dedicated his life to the construction
of a dream that has come true. At the age of fifteen, Pasquale Natuzzi joined
as an apprentice the workshop of an upholsterer friend of his and, in 1959,
he started his own businesses by opening the first craft workshop for the
production of sofas and armchairs, which developed into the current mul-
tinational corporation. The keys to success are linked both to his technical
ability and to his stubbornness as an entrepreneur. Thanks to them, his first
great intuition came to life, turning out to be an excellent example of radi-
cal high-impact innovation: the democratization of the leather sofa . Until a
few years before, the leather sofa was, in fact, a product reserved for an elite
clientele. It is thanks to Pasquale Natuzzi the leather sofa has been made
financially accessible to everyone, revolutionizing the product’ s architecture
and its manufacturing process. With the introduction of a manufacturing
technique known as “ hooding the sofa,” he managed to drastically reduce
the production cost and, above all, to manufacture on an industrial scale a
product that until then had been mainly hand-crafted. Before this technique,
an artisan placed the leather or fabric covering directly on the rigid frame,
then broke and modeled it, working the sofa directly on the frame, with very
long times and very high costs. Pasquale Natuzzi’ s innovation has been to
completely distinguish the structural part, which is technically called “ stem,”
from the covering, which is cut, sewn, and then assembled in one stroke:
this has meant that the times were reduced noticeably, cutting down costs.
Thanks to this enlightening discovery, and to products characterized by an
extremely attractive design for those times, Pasquale started collaborations
with large stores (Macy’ s and other large retail chains) that allowed him to
successfully enter the difficult North American market and reach the goal of
stock market listing in 1993. In October 2008, Pasquale Natuzzi was inducted
into the American Furniture Hall of Fame for the contribution to the growth
and development of the furniture industry in the United States. Natuzzi is the
first non-American to have received this recognition.
5.7.2 Today’ s Context and Challenges

The current context presents such an industrial and economic complexity
that the company’ s competitiveness on the market is challenged daily. In
addition to the real price war that is in progress— due to the proliferation
of numerous national and international competitors in every market seg-
ment— there is an impressive growth in the industrial complexity necessary
to remain in this kind of business. By reading some figures, one easily gets
the idea of such complexity, and in particular of the Natuzzi world:
◾ About 1,600,000 “ sitting places” produced every year

◾ A new project every two days, around 120– 130 new models per year
◾ Five-hundred models in production
◾ Twelve different versions for each model (ex. the armchair, the
“ 2-seater,” the “ 3-seater,” the corner, the “ recliner,” the bed)
◾ Each version in thirty types of leather, each of which in ten colors, or
twenty types of fabric, each of which in ten colors
◾ One-thousand different codes for sofa feet
◾ Six wooden finishes
◾ Five metal finishes
◾ Five types of “ comfort.”
One needs to know that “ comfort,” that is, the morphological configura-
tion of the sofa to obtain a certain comfort of sitting, changes according to
the market. For example, you can distinguish “ comfort” in two categories:
the “ seat in” and the “ seat on,” the first represents the typical American
comfort, “ I sit inside” and “ I want to sink,” the second represents the typical
comfort of Northern Europe (Germany, Sweden), “ I sit on top” and “ I want
stiff sitting.” In Italy, there are both types of comfort are common. There
are also comforts that are linked to national regulations: in order to be sold
in over 120 countries in the world, the products must respect all the exist-
ing regulations. For example, if you want to sell a sofa in the UK, expanded
polyurethane, the dominant part of the sofa’ s upholstery, must comply with
that country’ s fire-proof regulations.
One of the most important challenges to be overcome, the object of
this case study, has been the reduction of the Design Lead Time. In fact,
the average amount of launches every two days of a new model coexisted
with an average time to market of four to five months. So, this caused
problems every time something was changed during the development of
the product launched five months earlier, such as changes in specifications,
new requests from retailers, new production constraints, etc. In a context
that is now used to obtaining new products in a very short time, some-
times even to deal with sudden customer requests, obviously, this perfor-
mance was not acceptable.
5.7.3 Project Setting and Starting

The purpose of the project carried out was to introduce the principles of
Lean Product and Process Development in the R & D department of the
Natuzzi Group (consisting of more than one hundred people divided into
seven departments with forty different roles) to achieve the following three
main objectives:
◾ Reduction of the development time of a new product from the initial

brief to the start of production.
◾ Increased productivity of the department in terms of products devel-
oped per man hours employed.
◾ Reduction of the product cost according to the logic of the full product
cost (materials, components, and production).
We started with specific training to convey the approach and the main
methods necessary to correctly tackle this project. This phase was important
not only for the sake of technical alignment, but above all for the alignment
and the “ social” involvement, which must not be neglected or left to chance
in any project— even less so for projects of this complexity— if we want to
achieve the results, and in the shortest time possible.
After the methodological alignment phase and the definition of the “ rea-
son for action” of the project, the complex mapping of the current state was
performed (Figure 5.71) which revealed over one hundred critical issues
throughout the process and an estimate of the average lead time between
fifteen and twenty working weeks depending on the type of product.
Figure 5.71 Mapping of the current state of the Natuzzi Group R & D processes.
The main critical issues identified in the corporate R & D system are
summarized below, broken down by the various departments:
Value Area
◾ Difficulties in synchronizing Marketing and other Product Development

functions (for example, the market requires products that are not
developed by the prototype section, and products that remain unsold
are developed).
◾ Not always an optimal correlation between the quality of the compo-
nents used and the performances of the product, with specifications often
aligned to the best brand without reason (waste of resources and materials).
R & D Process Area
◾ Frequent emergencies that produce continuous deviations and changes

to the process.
◾ Need to strengthen methods to promote the standardization of compo-
nents and the use of existing modules in the development of new sofas.
◾ Weakness of processes and design systems for creating industrial plat-
forms and the reduction of complexity.
R & D People Department
◾ Absence of a transversal coordination figure from the beginning to the

end of the development (e.g. Chief Engineer).
◾ Duplications, rework, and waste between prototyping, testing and costs,

and production sampling phases.
R & D Tools Area
◾ Need to improve the effectiveness of planning, visualization, and syn-

chronization of the status of ongoing projects.
◾ Need to introduce structured Checklist systems to guarantee industrial
feasibility, quality, costs, and compliance with industrial restrictions.
At this point, being guided by the objectives to be achieved, the princi-

ples of Lean Product and Process Development were introduced to plan the
future state of the process, so as to overcome the criticalities encountered in
the current state.
The operational phase, due to the complexity of the department to be
transformed and the number of people directly and indirectly involved in
the process, was very delicate and full of pitfalls. We started from grouping
the 101 critical issues in twenty-one intervention areas, subsequently clas-
sified on an impact/effort matrix (Figure 5.72) to be tackled with the right
priorities and based on available resources.
Once the priority projects were identified— some “ quick wins” (top left)
and other more complex, but necessary ones (bottom left)— for each of
them a customer team was set up, supported by one of our consultants, with
the final goal of making the planned future state operational.
1 6 7 4 5
EASY
8 14 18 12 15 16
HIGH IMPACT LOW IMPACT

DIFFICULT
2 3 9 19
11
10 13 17 20
21
x Project deemed a priority and strongly recommended
Figure 5.72 Impact/Effort matrix used to choose project priorities.

5.7.4 The New Product Development Process

The New Products Development process was revised with the introduc-
tion, where possible, of the principles of the Lean Product and Process
Development described in this book. Below are some of the main guidelines
that have been applied for implementing the future state:
◾ Frontloading : structured moments of debate and decision were intro-

duced (product committees-creativity committee, etc.) in order to align
people as far as possible and filter the products to be launched into the
development process.
◾ Modular product architecture : a range plan was developed and real
industrial platforms from which to start the entire development process
were defined.
◾ Process standardization : the development of the new models was man-
aged through the Project Review System tool seen in Chapter 2 of the
book and the Engineering Checklist.
◾ Pull System : a Pull synchronization system of activities has been intro-
duced, with a pragmatic Kanban of fine scheduling, regulated by a
Visual Planning tool.
◾ Capacity control : a system for leveling and correctly dimensioning the
workloads of the individual R & D departments was introduced.
◾ Design to Cost and Design for Manufacturing : a huge effort has been
made to introduce the key principles and, above all, to obtain measur-
able benefits over a few months.
To make the key steps of the new process tangible and easily visible by
everybody, as well as to make decision-making easy by considering the
whole process and all the design constraints, the Visual Planning tool was
developed (Figure 5.73). This tool has constituted the unique framework on
which to base most of the other process improvement projects, a kind of
common ground that is easy to share with all one hundred people in the
department and the rest of the organization.
Following the guidelines of this concept, namely the sequencing of the
phases, the limited capacity based on the available resources, the pull system,
and the immediate visualization of the progress, the first prototype on paper
was created and affixed in the corridor accessing the area common to all offices.
The board showed at the top the timeline of the various trade shows
for which the products had to be presented, on the left was the panel of
Figure 5.73 Visual Planning and Kanban system in R & D activities.
all the products (tags) that were waiting to be included in the development
process; at the center, the progress of each product (tag) through the vari-
ous sequential phases in which the new product development process was
divided following the map of the future state; at the bottom, the products
that presented some problems and needed an intervention and/or decision;
and finally, on the right, the products completed during the year.
The complexity determined by the many different phases of the process,
the large number of people involved with different functions, manage-
rial and operational, the high number of shows to attend at different times
throughout the year, the wide variety of products in phase of development,
are critical issues that became clear and immediately available to all the
people directly or indirectly involved in the process itself.
In a short time, the area in front of the board has become the preferred
place to conduct all meetings, from operational to strategic management
ones. After the end of the project carried out with Lenovys, the customer
digitalized the Visual Planning and the Kanban system, allowing it to be vis-
ible also to people not physically present in the R & D area.
Another critical area of the process successfully dealt with was that of the
continuous iterations that made the products in progress go back and forth
between the phases of the process, due to the information necessary for the
following phases being incorrect or not available. This also is a critical issue
that is encountered very often in the product development processes, which
leads to high waste in terms of quality of the products developed, of time

used by the staff, as well as the obvious extension of throughput times.
In this case, using the structure divided in phases of the Visual Planning,
the Project Review System was developed, to be associated with each prod-
uct in development. For each of the development phases, we have carefully
identified the deliverables to be released, considering that each downstream
phase acts as a customer of the upstream phase and listing all the informa-
tion required step by step, who must produce them, and when they must be
produced. To complete the operation of the system, the deliverables con-
tained in the Project Review System have been used as a mandatory check-
list in order to be able to consider a single phase as finished and advance
the product (the tag) to the next phase of the process on the same Visual
Planning board. No product can advance in the process without the infor-
mation necessary for the subsequent steps; on one hand, this leads to identi-
fying and solving problems in time (preventing them from moving forward,
with the inevitable consequence of making them more difficult and more
expensive to solve), and, on the other, it prevents the project from blocking
and returning to the previous phases, provoking continuous “ Stop and Go”
and out-of-control problems of various kinds (if, for example, an informa-
tion present in the project Review System in phase 2 is not available, and is
obtained later when the project is in phase 5, the decisions made in phases
3 and 4 will be based on incomplete information, almost certainly not opti-
mal, and very often wrong).
5.7.5 Product Architecture and Platforms

One of the project features that had the greatest industrial impact was the
effort that was carried out to implement the industrial product platforms
based on a modular approach.
The objective was threefold: to build modularity, to make it sustainable
over time (it is not enough to implement it, it must be maintained, too) and
to regulate its growth by managing the demand for new models in this field.
This part of the intervention was conducted with the modularity
approach (see the technical details in the Appendix of this book) that
takes into account both the structure of the entire product range and
the constraints imposed by the production flow: innovation in terms of
product architecture must emerge from the best combination of the two
points of view: that of the “ product” and that of the “ production process”
(Figure 5.74).
Figure 5.74 Modularity framework.
The modular approach to the “ product” is based on the concept that

multiple models, previously generally designed in succession and sepa-
rately from the others, must be designed after being planned simultane-
ously. The application of this concept is made by defining what is now
often called “ modular architecture of the entire product range” or “ Variety
Matrix.”
There are two reference archetypes to define the product variety matrix:
◾ the vertical structure

◾ the horizontal structure
The vertical structure divides the product into basic modules; the hori-
zontal structure considers the product as a range of models.
The focus of this project was to produce the largest number of models
with the lowest number of components.
For the part of “ production process” it was necessary to take into account
the innovation previously applied by the Natuzzi Group, adopting the con-
cept of the “ moving line” from the automotive sector, namely, a continuous
and sequential path in which the sofa is manufactured in every detail, from
the cutting of the leather to the packaging. While previously the uphol-
sterer made his sofa from beginning to end— a sofa that may weigh up to
120 kg— with the new concept of the moving line the sofa is divided into
its main parts: left armrest, right armrest, backrest, and seat (minimum four
parts), and each part is assigned to an upholsterer. With this production
concept, the product moves and goes through different workstations where
the operators make the individual parts of the sofa. No longer separate com-
partments, production islands, but a continuous process in which teamwork
makes work faster and more varied, but above all cheaper and therefore
occupationally favorable.
The first part of the project to introduce the industrial platforms
focused on the implementation of a pilot project starting from the com-
mercial platforms, or rather the range of models on sale which would
remain unvaried in the future or which would be changed accord-
ing to market requirements. Therefore, an attempt was made to con-
struct a first industrial platform composed of similar models for the
construction logistics of the product and the manufacturing structure
(Figure 5.75).
After the development of the first industrial platform, the volumes and
their stability over time were verified. Subsequently, a variety reduction
plan was applied to the identified models, with a consequent reduction in
the number of codes and an increase in the common component indices,
which led to encouraging results. Initial results of the implementation of
the first pilot project to apply the principles of modularity and platforms
(Figure 5.76), and were then far exceeded in the subsequent industrial plat-
forms that were implemented.
An example of the component reduction technique is shown in Figure 5.77,
with a case in which the wooden frame of the sofas is standardized.
Figure 5.75 Development of an industrial platform starting from various commercial

platforms.
Before After Delta

No. of Models 6 6 0%
No. of Codes 118 69 –42%
Commonality index 34% 55% 21%
Figure 5.76 Summary table of the first pilot of modularity implementation.
Side panels and boom are all the same for all Fixed parts (boom sides
the versions of the plaorm and back sides)
Par
al "as is" status
Semi-variable parts (for

the width of the seat)
Figure 5.77 Example of technique for reducing components in the pilot industrial
platform.
Once the pilot phase was completed, the results were expanded with the
following steps:
1. Standardization and “ lightening” of the commercial ranges by conver-

gence on industrial platforms.
2. Standardizing the construction of industrial platforms with the help of
“ rules.”
3. Monitoring and managing the lifespan and evolution of industrial plat-
forms with “ visual cards.”
4. Managing the times for the introduction of new models, ranges and
industrial platforms (also in “ visual” mode) to avoid conflicts and con-
junction with ordinary new product development activities.
The Natuzzi industrial platform is a logical grouping constructed accord-

ing to predefined rules (see Figure 5.78) of models and product versions,
independent of the commercial ranges and brands.
1. Dimensions
2. Style
Figure 5.78 Rules for the construction of industrial platforms.
3. Volumes
4. Manufacturability
5. Structure.
The distinctive elements are:
1. The dimensional features of the product i.e. the seat height (H1), the
total depth (P1), the seat width (L1), the seating angle (A1), and the seat
inclination (A2), while the other dimensional characteristics are depen-
dent from the entry “ style.”
2. The style for which seventeen “ groups” to be observed were identified.
3. The sales volumes taken from the range plan. A platform, consisting one
or more models, in order to be initiated must have a minimum sales
forecast in order to feed a moving line at least for a shift.
4. The “ manufacturability ” derived from the division into components:
bottom, backrest, and armrest. As far as possible, we tried to make the
components equivalent in terms of number and type of pieces. The
decision was made not to fall below the defined parameters of the per-
centage of common elements and to reduce the number of codes and
total pieces to a minimum. The sewing did not play a role in the condi-
tioning of the platforms.
5. The structure for which today the rule is that of fixed, variable and
semi-variable parts (see example in Figure 5.79).
Figure 5.79 Example of an industrial platform structure based on the combination

options of the parts.
The models, to be part of a platform, must respect the logical/numeric

values defined for each element at the same time.
5.7.6 Operational Management of Industrial Platforms

The new platform system has been integrated into the development process
starting from the introduction into the range plan and from the definition
of the new designer briefs up to the production of the prototype. In fact,
the constraints of the platforms must move as far upstream as possible in
the R & D process in order to avoid deviations in the course of the various
decisions to be taken downstream in the design process and implementa-
tion phases; as an indirect consequence the process phases even further
downstream— such as industrialization and production— gain the advantage
of optimizing and standardizing part of the work, thus saving precious time
and energy, which can be used to face the many challenges that every new
product inevitably poses.
The industrial platforms are archived and managed through the “cards” or
forms and their implementation or enrichment of models/versions takes place
during the process of developing new products in the phases listed below:
◾ Brief coordination
◾ Acceptance brief
◾ Concept.
The production checklist is as follows:
1. Analysis of the proposed model.

2. Comparison with the parameters of existing platforms, not with the
intention of creating new platforms but of “ forcing” the logic(for exam-
ple see note on the heights on the next page).
3. If positive:
– immediately implement the (common) structure;
– rapidly proceed to prototyping.
4. If negative (which means that there is really no possibility of using
existing platforms):
– Check if the platform is sustainable (volumes of the proposed range
plan).
– If sustainable, proceed with the implementation (checking the new
structure with the ideas of technological innovation “ on the shelf” ).
– If not sustainable, find other alternatives or implement the concept
(out of standard production) to test the market.
The platform boards (in “ A3” format, see example in Figure 5.80) must
be compiled by Product Development after the concept phase, in the fol-
lowing way:
Figure 5.80 Example of a standard platform card.

◾ New card
◾ Update of previous card (update volumes).
In the absence of enrichment requests, the cards must be updated every

year, aligning them with the volumes required by the range plan. If the updates
show a worsening of the parameters, the platform itself must be reviewed.
The management of the first phase of the platforms aims to consolidate
their definition, and to reduce the number from the “ first” creation:
◾ “ Open” platforms to accommodate new products

◾ “ Closed” platforms will be eliminated over time.
5.7.7 Design to Cost: Design for Manufacturing and Assembly

Through the extended analysis carried out by teams from various functional
departments, an in-depth investigation of Design to Cost and Design for
Manufacturing and Assembly has been conducted in search of all the oppor-
tunities to reduce the total product costs: revision of materials, geometry,
functional optimization, standardization of components, unification, reduc-
tion of the number of components, supplier changes, etc. In this case, we
have adopted an operating technique that I call “ Tear Down,” that is, pro-
gressively stripping the product in search of wasted values which represent
opportunities for cost reduction.
Hundreds of costs reduction or simplification proposals have been gener-
ated (see example in Figure 5.81); each of them has been evaluated at an
economic level and assessed at an industrial and commercial feasibility level.
From the early stages of evaluation, the joint commitment of all the com-
pany departments necessary to complete the assessment was fundamental.
Unlike previous similar experiences of the company, in this project we have
taken extreme care regarding the management of the process steps follow-
ing the creation of ideas for improvement. In fact, five different monitor-
ing phases have been defined in order to follow the evolution of individual
ideas thoroughly:
◾ The potential evaluation phase of the proposal

◾ The economic, industrial and commercial validation phase of the proposal
◾ The prototyping phase
◾ The production launch phase
◾ The final calculating and accounting stage.
Figure 5.81 Example of a standard form for cost reduction proposals.
Of the hundreds of proposals generated, seventy-five were validated

and actually brought to series production and this led to both an impor-
tant reduction of waste in the components, and an optimization of design
choices and consequently resulted in a consistent average reduction in
the cost of components used (− 5%) and an even more marked decrease
in the cost of production (− 15%). The choices were then formalized in
a series of Engineering Checklists (“ design rules” ) to avoid that in the
future we would return to designing and manufacturing components
without taking the enormous work of optimization carried out into
account (Figure 5.82).
5.7.8 Implementation Phase of the New Principles

In order to better focus the energy available and to accelerate in the imple-
mentation phase of what has been seen so far, a task force has been cre-
ated, consisting of professionals covering the entire product development
process. Furthermore, an area dedicated to this activity was created where
the project leader, the designers, the analysts, and the prototypes could work
separately from the others, reproducing workshop conditions in which they
normally worked on a small scale, with all the necessary equipment.
The 120 most significant models were chosen (considering the Pareto
of revenues) to be re-engineered and assigned to the task force experts
committed to inserting them as soon as possible into the new respective
Figure 5.82 Example of monitoring ongoing actions to reduce product costs.
industrial platforms (hence the name given to the team “ Task Force Top
120” team) to start up the new operations as soon as possible and reach
the required targets (the overall range covers more than five-hundred
models).
The project manager monitored the state of transformation of the models
every day— to make them linked to the defined platforms— and the reduc-
tion of their full cost, divided into various types, through the representation
of the data that were updated by everyone on the task force in the Obeya
(Figure 5.83).
A fundamental step was the setup of the Obeya System, comprising of
the following:
◾ A room (the Obeya) where the activities (from the design to the con-
struction of the prototype) could be developed, and in which a perma-
nent multidisciplinary task force operated.
◾ A visual system for monitoring activities, from planning to cost reduction.
◾ A series of routines (daily meetings, etc.) that, once appropriately intro-
duced, formed the habits of the members of the task force, guarantee-
ing focus and results.
5.7.9 Results
The revision of the entire product development process, including organi-
zational changes and the introduction of new tools, has led to a significant
reduction of the Lead.
Figure 5.83 Scenes of daily life in the Obeya of the Task Force Top 120, anti-clock-
wise, are a view of Obeya, the Visual Planning of activities, the product/process set-
ting for each model, target and cost figures, the design rules (engineering checklist).
◾ After the first six months of the project: from over sixty to forty-eight
days.
◾ After twelve months: from forty-eight to thirty-seven days.
◾ During 2017 there were special cases, such as seven days on simpler,
private label models, and about twenty days on the more complex
Natuzzi Italia models.
Another important goal was the reduction of changes and iterations along
the process:
◾ A reduction of around 70% of the errors identified at the end of the

project.
◾ A reduction in the number of hours necessary for the development of a
product thanks to the clarity of information and the elimination of non-
value-added operations.
◾ An increase in capacity of around 15%.
Through the re-engineering of the first 120 sofa models, the path con-
tinued independently, and with the complete renewal of the entire Natuzzi
range according to the new rules introduced, further results were obtained:
◾ Savings of around 4% on materials, with a saving of over € 5 million.

◾ A reduction of over 10% of the cost of sales (COGS).
◾ Introduction of eighty design rules and fifty-two platforms that industri-
ally represent the thousands of commercial models for sale.
However, probably the greatest result obtained, beyond the numerical

evidence, was overcoming one of the most difficult periods in the company
history, returning to believe in their own means, their vision and in prod-
ucts, guided by the historical founder of the company, Pasquale Natuzzi.
5.7.10 Lessons Learned

There are so many ideas and lessons learned in this project that are useful
both to the Natuzzi Group for its future projects and to all readers of this
book. I will try to summarize the main ones:
◾ Always involve the top management from the beginning to avoid costly
backtracking during the project. The involvement of top management
must, however, be done using management language and not technical
language, through effective communication, and clarifying the correla-
tions between technical factors and strategic factors for the company.
◾ Manage the change well by means of appropriate activities involving
people, immediately identifying potential obstacles and managing them
by prevention.
◾ Choose team leaders well. It will be them to successfully complete
the project. Do not be influenced by other people who tell you who
to appoint but choose based on direct knowledge and that of direct
superiors.
◾ Attention to the correct identification of results and measurement from
the earliest stages. Remember that there will always be someone ready to
dispute matters, even when the results are good, saying they could have
been even better, so be aware of all eventualities. Just imagine what can
happen if you do not have any tangible index or result to show.
◾ Attention to excessive self-reference especially in the creative sector.

Creativity in the company must be organized, managed by processes
and aligned to make everything work.
◾ Beware of the rules, because very often I heard things like “ The plat-
forms or checklists or visual planning are stifling me, you’ re blocking my
creativity.” The rules strengthen the systems; they don’ t stifle anything.
Lack of rules weakens the corporate systems.
◾ The results obtained are not the direct consequence of a formal and
rigid application of a method. That is never enough. Unfortunately, I
have often seen companies in which the staff developed the “ copy and
paste” syndrome regarding the Lean tools, considered to be foreign
bodies that do not become the company’ s assets, and therefore lose
their effectiveness. The implementation of the Lean method and tools
must always be accompanied by the social aspect, the deep involve-
ment of people, the growth of human energy in the company and a
degree of customization essential for their effective applicability in that
reality in which they are inserted.
5.7.11 Next Steps

Despite the remarkable progress that the company has made in recent years,
new challenges are visible on the horizon. The first concerns the capital-
ization of the work done in order not to fall behind compared to the new
techniques introduced: from modularity and platforms to design to cost,
from pull systems of R & D management to the correct sizing of depart-
ments, from the daily use of the Project Review System and Engineering
Checklist to avoid reworking, unnecessary iterations, Stop and Go, loss of
standardization.
Another challenging element is represented by the raising of the bar of
competitiveness, with new and stringent cost targets required to remain
on the market while continuing to guarantee products of undisputed
quality. In this strand of challenge, the search for the highest quality
undoubtedly must be considered in all phases of production and sup-
ply chain, as at this point, no type of defect is acceptable anymore. A
real focus on absolutely zero errors. In this regard, it will be fundamen-
tal to push more and more toward the joint design of the product and
the production process, thanks to the adoption of the principles of Lean
Accounting, while continuing with all downstream production phases
with undiminished energy.
The last challenge, from my point of view, is represented by the consoli-

dation and full exploitation of all forms of digitalization of R & D activities;
activities started during this project and destined to gain ever more impor-
tance and relevance in the coming years.
Resources
https://www.lenovys.com/en/case-history/laika/
https://www.lenovys.com/en/case-history/lamborghini/
https://www.lenovys.com/en/case-history/sacmi-ceramica/
https://www.lenovys.com/en/case-history/sacmi-closures/
Notes
1. Data taken from the Sacmi Annual Report 2016, refer to: www.sacmi.com.
2. Sacmi Annual Report 2010, consultable at www.sacmi.com.
3. Data taken from the 2010 Annual Report, on line at www.sacmi.it.
4. Taken from the Sacmi Group’ s Lean Transformation Program newsletter of July
2011.
5. Report available on line at www.sacmi.it
6. For more about Set-Based Concurrent Engineering, see Section 2.3.
7. By courtesy of Continental Automotive Italia S.p.A.
8. Luciano De Oto joined Automobili Lamborghini S.p.A. in 2001. In 2006, he
became responsible for the design and development of the external and
internal parts of all Lamborghini products. In 2007, he was the Project Leader
for the Gallardo Superleggera, and, in 2010, he was manager for the Sesto
Elemento BIW Engineering. Before joining Lamborghini, Luciano worked for
Ferrari and Minardi in Formula One. Currently he runs the division dealing
with the development of all the components made from advanced composite
materials.
9. Pot-life is the period of time in which a mix in a concentrated mass of 200 g
can be used at 20° C before it begins to harden.
Conclusion: The Secrets to
Being a Lean, Innovative,
and Winning Company
The Importance of Really Investing in the

Company Fighting against the Procrastination
A journey of a thousand miles begins with a single step.
Lao Tzu
When is the right moment to embrace the change? When should the Lean
transformation of your company be faced? Will it be worth it? I knew the
CEO of an Italian company who hesitated for months about whether or not
to “ do something Lean.” He confessed his doubts to me about investing
money and time in consultancy and in staff training, and not seeing any sig-
nificant return. He also went to visit various companies that have begun to
implement change, each one with different consultants and different meth-
ods. And he was almost proud to tell me about the things he had seen that,
in his opinion, were not going well, and what he did not like. He forgot,
however, that every company is always a case apart, and that a Lean jour-
ney consists of falls, of picking yourself up and of small successes, which
then lead to the learning and acquisition of a bundle of technical and social
competencies capable of making the difference. He has still not made up his
mind, and unfortunately, the performance of his company is distinctly lack-
luster. Is this entrepreneur saving? Or has he already missed out on oppor-
tunities? Or is he putting off until who knows when some possible savings
that could be made in his company?
Perhaps none of all this. But let me give you another example.
285
286 ◾ Conclusion
The Cost of Procrastination

I have always been fascinated by what a good and well-known investor
friend of mine once told me. With illuminating calm, he explained how to
calculate the real cost of putting off a small investment decision. The magic
of compound interest is such that if I were to put aside one euro a day, and
I learned how to exploit my savings at an annual rate of 10%, repeating this
operation for fifty-eight years, I would accumulate a million euros.
If, instead of one euro, I put aside two euros, the number of years
required to accumulate a million euros would fall from fifty-one to fifty-eight
years. And if I put aside three euros, forty-seven years would suffice. In
the United States, these kinds of investors are known as “ bread and butter”
investors.
Well, after having made sure I had understood this basic concept, I set
about quantifying the cost of procrastination.
Let’ s suppose that I was able to regularly save two-hundred euros a
month for the next twenty years, with an annual return of 20%, a rate lower
than what an investor would, on average, like to see if he or she invested
in a serious and successful company investment. I would obtain capital
amounting to 540,000 euro after twenty years. Now let’ s suppose that I
started one year late: doing the sums again, for nineteen years instead of
twenty, I would find myself with about 440,000 euros instead of 540,000,
that is to say, approximately 100,000 euros less. This is the cost of procras-
tination: 100,000 euros in a year for not having started the investment plan
now. But there is more than that: the cost of putting off investment is very
high: every day of delay would cost me almost three hundred euros. In fact,
dividing 100,000 by 365, I would find myself with loss of earnings amount-
ing to over 273 euros for every day of delay.
If we were to apply the calculation of the cost of procrastinating about
an investment, however simplified and rough-and-ready, to what happens in
our companies, we would come to realize how many real opportunities we
lose if we delay investing in the growth of our resources, in the growth of
our entire company. Why does this happen? Because there is little propen-
sity to attribute value to the intangible assets of our companies. If, from an
economic and financial point of view, it is very easy to calculate the asset
value of buildings, means of production, the number of “ heads” in a com-
pany, stock, and so on, it is much more difficult to estimate the value of
knowledge, of available human capital, and of the genuine know-how pres-
ent in a firm.
Conclusion ◾ 287
How much is the autonomous capacity to solve a problem more quickly

than someone else worth? Or the ability to learn from one’ s mistakes more
quickly than others? And the capacity to spot areas of waste in a company
and eliminate them? And to develop new products faster than competitors
do? Although these are hard to quantify from a purely accounting point of
view, these are just some of the abilities that can determine the success or
otherwise of a company.
Today, people really can increase the assets of a company, enabling it to
achieve objectives that would be unthinkable following a short-term per-
spective, and without considering the real value of certain characteristics
that are apparently intangible but which have very tangible consequences.
So, starting on a Lean journey today is like putting off a small investment
every day that can lead to acquiring a much bigger value over the years.
The situation of many excellent companies has shown that the virtuous path
of continual, long-term growth brings advantages over both the long and
short-term.
The reverse is not true.
What Does It Mean to Invest in a Company Today?

Unlike what has traditionally been done, investing in a company should
no longer be seen just as the acquisition of capital goods and resources
capable of ensuring the transformation of materials and information so
productive and economical as to guarantee a return on investment superior
to the cost incurred. Today, the word “ investment” involves the most pre-
cious of all available resources: time. Ours and that of everyone working in
a company.
The old saying “ time is money” still holds good today, but it is even
more valid in relation to the greatest waste that we run the risk of every day:
The greatest waste in the world is the difference between what we

are, and what we could become.
Ben Herbster
Not knowing which risks we are running and which opportunities we
are missing is a form of waste similar to the procrastination about the invest-
ment that I have just told you about.
In contrast to some years ago, company assessment sessions can now be
carried out very rapidly. In the space of just a few days, it is possible to map
288 ◾ Conclusion
the real situation of the company’ s chief processes, to identify the risks and
opportunities, and to economically quantify the effects of introducing appro-
priate countermeasures.
It is no longer necessary to resort to expensive and long company assess-
ments which ended up— and still do if the method of analysis is not chosen
well— with an embarrassingly large quantity of slides, then turned into anti-
ecological heaps of paper and rivers of words in order to propose solutions
for how knows what. Basically, the idea was “ I’ ll tell you what to do, and
you get on and do it. I’ m leaving now.”
In order to carry out these rapid assessments, it is necessary to have skills
and experience built up during many other evaluations that are methodolog-
ically similar but never the same in terms of content or the individual pro-
cesses dealt with from one company to the next. The ability to immediately
get to grips with the issue at hand and provide concrete evidence of what
could be obtained is now more valuable than ever.
This type of analysis should never last more than a few days, conducted
together with a team of experts. Longer analyses would undoubtedly cost
more and tend, in my view, to create the risk of once again bearing out the
Pareto principle, otherwise known as the eighty-twenty rule: What is the
20% of factors that gives me 80% of the results?
There is no need to get lost in the meanderings of the useless.
How to Achieve a Winning Company

Always dream and shoot higher than you know you can do. Don’ t
bother just to be better than your contemporaries or predecessors.
Try to be better than yourself.
William Faulkner
Enthusiasm for the Products We Offer

The secret of a company capable of prospering over time lies in its capac-
ity to systematically conceive of new products that “ excite” customers, to
produce them in the most efficient way possible, and to get them onto
the market quickly. We have seen how many opportunities there are for
improving the products and services that are developed. We have also seen
that the best way to obtain winning products depends essentially on the
Conclusion ◾ 289
construction of solid processes and the development of winning people who

never stop learning.
It is possible to make real innovations without inventing anything, but
by transforming the many weak signals we receive all the time both from
within our companies and from outside, above all from our customers.
Being enthusiastic about the products we develop, manufacture, and sell
means knowing how to step into the shoes of those who use them, and
achieving a profound understanding of how they are used and experienced,
the problems that exist “ in the field,” and what opportunities there may
be for their future use. All of this can be turned into a systematic process,
where a combination of creativity and discipline creates a happy marriage of
technical, social, and relational aspects. In this systematic process, there is of
course space for the essential elements associated with the development of a
winning product.
Love Simplicity
If asked for a phrase that captures the spirit of the Lean philosophy, the one
I would choose is “ Keep it simple.” Simple, essential, brief, and documented.
In this book, we have examined many examples of summary documents
fundamental to projects run in companies, for example, the Concept Paper
or the matrix for evaluating the different concepts that are explored. We
have also seen the importance of all the other forms of communication, and
to what extent these can make a specific and effective impact, with numbers
and facts, in any part of the development process. Consider, for instance, the
standards employed or the A3 techniques, written documents that communi-
cate important decisions with a desire to be succinct and to learn continually
from experience.
Winning Convictions
We have seen how much weight the social dimension has in development
processes, and how much it can really influence the results of a business:
from the ways in which we hold our meetings, to how we manage work-
ing relations within the company; from the correct management of con-
tinual learning to focusing on the prevention of conflicts or problems in
the future. And if we talk about the social factor, we must also focus on
the individual person that is the center of this process, and about how the
“individual beliefs” can influence the spirit of a group in one direction or
290 ◾ Conclusion
another. How much time do we spend on our own or in a group trying

to sort out problems that were simply underestimated in the early phases
of a project? What is the effective impact of the belief that the best way to
obtain results is the “ just do it” approach, rather than devoting much more
time than usual to thinking about and planning things before swinging
into action? What is the effective impact of the powerful orientation toward
achieving results at all costs, rather than taking care to build the processes
through which we will achieve results? All of these questions have precise
answers, but it will be our beliefs about them that determine whether we
discover them or not.
Fall in Love with Problems

We tend to hide problems, to run from and minimize them, hoping that they
will not get worse, rather than learning from them in order to implement
the continual innovation of products, processes, and people. Continuous
improvement is a sustainable and enduring strategy for progress at both an
individual and company level. It is also markedly less expensive than many
other strategies. However, there is a catch: it only works if we accept the
need to discover the opportunities that lie behind the many problems facing
us every day.
The Right Process Always Leads to the Right Results

When this set of elements begins to become established in a business, I
have always noted that an aggressively result-oriented approach gives way
to a reflective attention toward the rules of the game, with the realization
that the right process always leads to the right results in less time overall
and with less stress. First of all, it can be replicated by ourselves and others
over time, with similar results. By contrast, we have seen that the absence
of stable and solid processes can lead to a certain unpredictability in the
results, for this reason, things may work out well or badly depending on the
various factors that have influenced our activities and projects each time.
Experts in Assistance Rather than Control

In order to run businesses capable of introducing Lean innovation, some
traditional forms of management may be inadequate in many ways and
Conclusion ◾ 291
could limit the innovative drive within a company. Relying on authority and
“ vertical” delegation to run groups and organizations is no longer sufficient
to deal with the powerful need to spread responsibilities more widely in
order to solve cross-functional and horizontal problems. Managers today are
being called upon more and more to involve people and transmit a sense of
responsibility to them, making them increasingly able to solve problems that
may lie outside their specific sphere of action. In these cases, the role of the
manager shifts from being an expert in control to that of being an expert
in assisting and watching over processes and the responsible activation of
individuals.
Have Faith in Experiments

Another aspect of traditional management that may limit the force of Lean
innovation is, paradoxically, an excessive “ faith” in planning as a tool for
obtaining the right results. Often, we delude ourselves that good results are
equivalent to implementing a good plan. Together we have seen that plans
are important, but even more so are the processes with which we act. In
many cases, it is wise to go back to the basics, that is to say, considering all
planning processes as genuine scientific experiments, in which we draw up
a plan, put it into practice, check the results, respond to unforeseen fac-
tors, and start again, following the old but still valid Deming cycle: plan, do,
check, act.
Go Slowly to Arrive First

A final, but by no means less important, limitation of traditional manage-
ment is “ moving fast.” Jumping straight to solutions and results gives us the
impression of going faster, but in reality leads to a systematic slowing down
later on, what with errors, problems, and repetitions, as a result of which
we end up being much slower. In Lean innovation, starting off slowly is
always a valid principle. This means beginning with a perfect understand-
ing of the problem to solve or the need to satisfy, analyzing and defining
many different possible countermeasures or solutions, exploring them in
parallel without having to choose in a rush, and converging slowly toward
the final solution, often with higher costs at the beginning, but actually with
lower costs, less time spent, and happier customers by the time the project
is complete.
292 ◾ Conclusion
Sometimes we feel almost “ frightened” by the size of the mountain to

climb. But instead of stopping, we must always try to understand what the
first step might be for us, and do it as well as we can. Because only after
having done it will we be able to clearly see the next step to take. Months,
or perhaps even years later, we will find that we have scaled mountains we
never thought could be climbed.
Appendix: Modularity:
The Way to Reduce the
Total Product Costs While
Drastically Increasing the
Industrial Flexibility
Gianluigi Bielli1
Modular Development
Over the course of time, modularity has had different meanings and been
applied in various ways. For example, the notion of the module was first
employed widely in classical architecture. Just think of the ancient temples,
based on reconfigurable modules assembled in different ways in order to
produce very different end results. Or take the works of many Renaissance
artists: their proportionate construction of forms was achieved through an
art based on a scientific knowledge of standard, modular components.
In the 20th century, with the phenomenon of industrialization, modular-
ity became a “tool” that responded to specific requirements associated with
the mass production of components. With the advent of the third millen-
nium, mass customization has become the chief characteristic of the market
(Figure A.1), with modularity being a source of innovation offering the most
efficient answer to the joint requirements of rapid response, product flex-
ibility, and low cost.
293
294 ◾ Appendix
Figure A.1 From mass production to mass customization. (Ramani, K., Cunningham,
R., Devanthan, S., Subramaniam, J., Patwardhan, H., 2004.)
Mass Customization
To be successful, the two objectives to pursue simultaneously in today’s
competitive world are continual differentiation of the product/service in
order to meet the needs of customers, and the continuous reduction of total
product costs(materials, processes, distribution).
An effective strategic response to these challenging objectives is product
modularity, that is to say, the breaking down of a product into standardized
parts (modules).2 The great advantage of this is that it is possible to obtain
cost benefits and differentiation at the same time.
From this point of view, product and process modularity is one of the
cornerstones of mass customization.3 A number of typical features of mass
production are employed in a different way: standardization and economies
of scale are used principally in relation to the hidden parts of the product,
while customization is achieved through exterior design and other more vis-
ible components of the product.4
The auto industry, which has always set trends by virtue of the character-
istics of its products and its customers, exemplifies the progress from com-
mon platforms to interchangeable modules (Figure A.2).
The differences in price between models in the same family are no lon-
ger the result of substantive differences in value and content, but are now
more “driven” by marketing policies designed to maximize the image of
a brand. This is done, in part, through a careful selection of modules (for
example engines, chassis, bumpers) to be used on one brand or another.
Appendix ◾ 295
Figure A.2 The evolution of the Volkswagen Group modular assembly toolkit.
(Source Volkswagen Group.)
Together with Fiat, Volkswagen was one of the first car manufacturers
to grasp how fundamental the synergy between models and brands for the
future of the industry. For these two companies, they estimate saving an
overall cost of approximately 20% and the number of design and develop-
ment hours by approximately 30%.
Based on these activities at Volkswagen and Fiat Chrysler Automobiles,
the proportion of costs devoted to modules common to many models would
rise from 60% to 70%, while the proportion devoted to specific components
of each model would drop from 40% to 30%.
The aerospace industry has also relied on modularity to contain costs,
amongst other things. One example is the development of the Joint Strike
Fighter program, the goal of which was to produce a plane that could replace
different models used by various air forces (United States, Britain, Italy, Holland,
Canada, Japan, Israel, Turkey, Australia, Norway, and Denmark). The program
was set up to replace many different planes while keeping development, pro-
duction, and operational costs low. This goal was pursued by building three
variants of a single plane through the use of shared components (Figure A.3):
◾ F-35A: conventional take-off and landing variant (CTOL)

◾ F-35B: short take-off and vertical landing variant (STOVL)
◾ F-35C: carrier variant (CV).
The F-35A is the smallest and lightest, and is the basic model; the main
difference of F-35B from the base version is that it has an engine with an
296 ◾ Appendix
Figure A.3 Chart comparing common parts between each of the three F35 variants.
(Source Lockheed Martin.)
exhaust nozzle that can be directed downward, and a lift fan with mobile
lower fins that could be oriented 15°–30° forward or backward from the
vertical position. The fins are installed behind the cockpit, in the place of the
in-flight refueling system, which is in the plane’s nose, and of the cannon.
The F-35C differs from the basic version in that it uses a different engine, has
greater internal fuel capacity, and has larger wings and tail control surfaces.
Coming to Terms with Costs and Time

The previous considerations suggest the need for a different and alternative
view about costs that can be broken down into three categories:5
◾ Functional costs (F)

◾ Variable costs (V)
◾ Control or management costs (C).
In other words, total costs = F costs + V costs + C costs.

F costs are those for the parts required to satisfy the necessary specifica-
tions, and the processing or assembly of those parts; they derive from the
specific functions and structures of the products.
Appendix ◾ 297
V costs vary according to the production volumes of each product or

production process and stem from the types of parts and of production pro-
cesses. C costs are those incurred in checking the parts and the manufactur-
ing; they are calculated on the basis of the total number of parts, production
processes, and control points. An indication of the breakdown of V, F, and C
costs in relation to the mass production of, for instance, cars and consumer
electronics, is given in the histogram of Figure A.4.6
On the other hand, build to order industries, for example, those specializ-
ing in the production of heavy electromechanical equipment, have an F cost
of 40%–60%, a V cost of 20%–30%, and a C cost of around 30%–40% of the
total.
The requirements of mass customization lead to a rise in costs, because
of the need for a greater number of components (F), the increase in the
number of production processes (V costs), and the increase in the control
functions and other indirect tasks (C costs).
The common conviction is that a product modularity strategy leads
to cost savings for the manufacturer and a reduction in the price for the
customer.
In the short term, investments in modular architecture can lead to an
increase in the costs borne by the manufacturer, due to added costs in
research, design, and testing activities.7
However, in the long term, cost savings connected to the projects could
can be significant. Figure A.5 shows the breakdown of the actual costs of
a complex electromechanical product in the food sector emphasizing that
the application of modularity not only reduces costs but also reduces the
Figure A.4 Trend of the incidence of V, F, and C costs.

298 ◾ Appendix
Figure A.5 Effect of modularity on the reduction of costs and lead time.
product development lead time. Companies often struggle with this phe-
nomenon, because their traditional accounting systems do not necessarily
capture the true savings. As discussed earlier in this book, understand-
ing and quantifying the savings along the entire Value Stream using Lean
Accounting8 techniques can assist in seeing the true benefits of modularity.
According to many published reports, most businesses invest the
resources freed up by modularization to support new product development
projects to provide customers new features and products rather than cutting
prices. In other words, modularity can help to get more value-added prod-
ucts to the marketplace with the same number of people.
Basic Characteristics of Modular Development

In the development of new products, dimensional and functional coordina-
tion on modular designs represents the practical link between the overall
project, the production of components, and final assembly. The products
may be of a single specific type (closed-cycle industrialization) or belong to
different categories (open-cycle industrialization).
In the first case, non-configurable products are offered to the customer;
these are internally managed with a number of standard modules that are
reused on various models. In the second case, after having introduced the
modular architecture, customers can configure the products during the
purchasing phase. For example, open platforms are produced with standard
interfaces that can be used to make finished products combined with prod-
ucts from other suppliers.
In particular, the adoption of a modular system tends to ensure the
union of components at the geometric level. This characteristic ensures their
Appendix ◾ 299
compatibility, from both dimensional and functional points of view, with other
components. From this perspective, the main capabilities that the module must
provide for the manufacturing and assembly can be summed up as follows:
◾ Interchangeability: the need to give the designer maximum freedom in

choosing between “comparable” products.
◾ Reduction of product variety: offer a sufficiently wide but not unlimited
range of models, the goal being to rationalize production (and signifi-
cantly extend the market, particularly if the module is internationally
accepted).
◾ Reduction of process variety: facilitates standardized assembly and per-
mits economy of scale by reducing production time.
Interchangeability between different modules is an indispensable condi-

tion for a modular product. Interchangeability can come in two forms:
◾ Class “I” interchangeability, obtainable without further work (design or

manufacturing).
◾ Class “R” interchangeability, obtainable with additional work (minor
design or process changes).
Interchangeability is normally managed throughout the manufacturing cycle:
◾ As designed, and therefore assured at the design phase as a morpho-

logical correspondence and with tolerances for the planned pairing.
◾ As built, through the realization of reference masters for industrializa-
tion (Gold Master, Silver Master, etc.), either physical or electronic.
◾ As delivered, thanks to checking of manufactured items with appropri-
ate Acceptance Gauges, which may be physical or computer-based.
The management of interchangeability is one of the most important steps

in modular product development. One suitable tool is the interface matrix;
the one illustrated in Figure A.6, in the form of a relationship chart for a
vacuum, shows some types of connections. For example, in this case, the
“G” (“I” and “R” class geometries) and “E” (energetic/functional) are cited,
and there could be others.
The interface coding can be expanded upon with indications regarding
the mechanical tolerance and other significant parameters, besides the level
of importance/criticality of the pairing.
300 ◾ Appendix
Figure A.6 Interface matrix for vacuum cleaner modules.
The arrows indicate the two optimum solutions: the vertical one regards
combined assembly, and the diagonal one illustrates platform assembly (in
this case the chassis is the platform); any connection outside such zones
should be avoided.
The reduction of product and process variety must be managed sepa-
rately: the architecture of a single modular product is one situation; the
architecture of a whole range of modular products is another story. Today’s
markets are increasingly demanding the second one.
Modular Architecture of the Single Product

Product architecture can be defined as “the way in which the features of the
product are associated with the physical components.”9
The architecture may be integral, where each function of the product is
associated with more than one component, or modular, when each func-
tion of the product is linked to just one component. The latter are normally
distinguished as follows:
◾ Slot architecture, where each component has a different interface from

the others.
◾ Bus architecture, where there is a common bus to which all the compo-
nents connect with the same type of interface.
◾ Sectional architecture, where all the interfaces are identical, and there is
not a base component to which the others connect.
In order to create a modular architecture for a single product, it is neces-

sary to determine how to divide the product into how many modules.
Appendix ◾ 301
Various methods are available to guide the process of establishing the

number of modules. They include the following:
◾ Heuristic method
◾ Modular Function Deployment (MFD)
◾ Design Structure Matrix (DSM).
The heuristic method consists of two phases. In the first phase, the
product architecture is represented through the use of the function structure
method,10 represented as a flow of material, energy, or information inside
the functions (or components). In the second phase, empirical rules are
applied to identify the modules.
◾ Rule 1: dominant flow, that is to say, if it passes through a series of

functions (or components), these should form a module.
◾ Rule 2: branching flow, that is, chains of parallel functions (or modules)
downstream of a flow that branches, should form a module.
◾ Rule 3: conversion/transmission, in the sense that a conversion function
(or component) or a conversion and transmission pair (or chain) should
form a module.
Modular Function Development (MFD) is a modularization method con-

sisting of the following steps:
◾ Identify customer needs and the product functions capable of satisfying

them by applying the principles of Quality Function Deployment (QFD)
and tools such as the Kano matrix.
◾ Define the technical solutions able to perform the requested functions,
starting with a functional breakdown of the product and then evaluat-
ing the possible alternatives with the application of the methodological
steps belonging to Value Analysis (VA)/Value Engineering (VE).
◾ Define the modules on the basis of the impact of the functions (or com-
ponents) on the twelve predefined modularity drivers, and consequently
define the dominant functions and construct the modules around them.
In an optimum situation, the number of modules should be the square
root of the number of parts or the number of assembly operations.
The Design Structure Matrix (DSM) is an objective method for suggesting

the possible grouping of functions (components) into modules. It is based on
302 ◾ Appendix
a “grouping” algorithm. In the matrix intersections, the relative dependencies

between the components or functions are indicated and prioritized.
Modular Architecture of the Whole

Product Range
The modular approach is based on the concept that multiple models, which
in the past were generally designed in succession and separately from each
other, should be designed after having been planned simultaneously.
This concept is applied by defining what has now widely come to be
known as the “modular architecture of the whole product range,” or “Variety
Matrix” (Figure A.7).
There are two reference archetypes to define the product variety matrix:
◾ Vertical structure
◾ Horizontal structure.
The vertical structure classifies the product into base modules; the hori-
zontal structure considers the product as a range of models.
A range of military vehicles designed with a toolkit logic offers a simple
illustration of the concept (Figure A.8). In the top section of the figure, there
is the product range (four finished products); beneath these are the estab-
lished modules, ten in all; and finally, at the bottom, there is an illustration
of the modular architecture of the product range.
To construct the matrix, the bill of materials of the different reference
models (Figure A.9) is used. A choice will be made between the techni-
cal or the production bill of materials. Special attention needs to be given
Figure A.7 Modular architecture of the product range.

Appendix ◾ 303
Figure A.8 Example of product range elements and modular architecture.
Figure A.9 Variety matrix structure.
to homogeneity when unifying the individual bills of materials in order to

facilitate analysis of the commonalities.
Reduction of Variety in the Domain of the Product Range

The Variety Reduction Program (VRP) was developed in 1975 by Akira
Koutade and Toshio Suzue from the Japan Management Association.
304 ◾ Appendix
The aim was to drastically reduce the costs derived from product innovation
and diversification requirements. The VRP is the most important comple-
mentary tool for modular design, and its goal is to reduce the variety of
modules (and of components) required by the product range.
Five techniques are fundamental to this approach:
1. Comparison between fixed parts and variable parts

2. Combination
3. Multifunctionality and integration
4. Range
5. Series.
The first technique involves the comparison first of the fixed modules and
the variable modules, and then of the fixed parts and variable parts that are
their components. This is done in order to determine the numerical values
and the configuration of the structure of the models, to establish the produc-
tion process routing, and to define the equipment needs.
This means creating a different set of products so as to combine the fixed
parts that form the base of the product groups with the variable parts that
form the base of the individual models. Defining the parts adjusts the prod-
ucts to the diversification of the specifications; at the same time, there is a
rationalization of the fixed parts. The technique is also employed to ensure
maximum flexibility and productivity in the manufacturing processes.
◾ Fixed parts: first, the product groups are examined, to identify those
parts that could be shared by different products; then the correspond-
ing production processes are determined, trying to ensure that each
fixed part corresponds to a process or a small number of processes.
Efforts are also made to automatize, mechanize, and simplify such
processes.
◾ Variable parts (and semi-variable ones, where possible): these are the
parts used in a distinctive way for particular types of product. They are
essentially produced manually, but there is the possibility to automatize
and mechanize the control of operations.
The goal of the second technique is to simplify the set of products and to
eliminate the gap between product requirements and characteristics, creating
a combination of interchangeable parts and modules suited to the diversifi-
cation of product models, with three possible methods:
Appendix ◾ 305
1. Use base elements plus additional elements, to establish first of all the
basic parts of the products and production processes, separating out the
structural parts from the additional ones. Various combinations of addi-
tional parts are then formed to create a variety of finished products.
2. Combine identical modules, thus establishing which modules are iden-
tical; the products are then built primarily by varying the number of
these modules.
3. Combine independent modules; to build the products different types of
modules are used, each of which has been designed to perform spe-
cific functions.
The third technique, multifunctionality and integration, is to reduce the

number of component parts and the number of production processes uti-
lized to process them. This gives rise to a series of alternative physical struc-
tures realizable with the smallest possible number of parts.
The fourth technique—range—is mainly employed when the objects of
examination are dimensions, numerical values, and specifications. The goal
is to ascertain a range or interval within which a specific requirement can
be applied, minimizing the type of parts performing a particular function.
The fifth technique ensures that the variable parts is in compliance with
a “series” of performance and measurement values. By pinpointing these
basic principles for ordering the values, it is possible to reduce the prolif-
eration factors of useless parts.
Product Range Planning

The product range planning is used to build an industrial plan based on the full
range of the models to be developed in the next three to five years. For each of
these models are defined: the market phase-in and phase-out dates, the costs,
and the profits so far as all the relevant information needed to build the plan.
All current and future products of the company are shown in the plan.
It is drawn up using the format of Figure A.10.
The data are drawn from the Concept Papers of the related single prod-
ucts or product families. You can see a real example in Figure A.11.
It is typically updated quarterly rolling with the consolidation of the sold
units in the quarter and with the addition of a further quarter to maintain
the fixed horizon of at least three years. All the data will be updated quar-
terly: volumes, costs, and profits of all models in the plan.
306 ◾ Appendix
Figure A.10 Product range planning (format).
Figure A.11 Product range planning (example).
Coincident Product and Process Modularity

The application of what has been outlined thus far leads to the construction
of a mushroom-shaped product architecture (Figure A.12), creating a variety
of options at the very first levels of the bill of materials.
It must be noted, however, that the range variety also has a parallel
course with regards to the production process. The concept of “modu-
larity in production,” especially from a mass customization perspective11
should also be considered. The variety funnel (Figure A.13) can be used to
Appendix ◾ 307
Figure A.12 Mushroom concept of range.
Figure A.13 Manufacture variety funnel. (Hines, P., Silvi, R., Bartolini, M., 2003, p. 79.)
understand how much variety impacts the efficiency and effectiveness of the
production Value Stream.
Through greater organizational autonomy, a group of focused and
accountable module owners working on their modules will enhance the
quality level of their modules, their rate of development, and their continual
innovation, with a visible impact on the whole system/product.12
In addition, a greater involvement on the part of production units/cells
dedicated to specific processes or components will help to accelerate the
time-to-market and the rate of innovative development of the modules and
308 ◾ Appendix
Figure A.14 Variety versus industrialization.
Figure A.15 Alignment of variety distribution.
their associated processes. Finally, Systems Integrators play an important

role, especially in the design phase of the product, facilitating interorganiza-
tional coordination between the different people contributing to the module
design and those involved in the production processes. Figure A.14 illustrates
the relative trade-offs between product variety and industrialization.
A modular development strategy must clearly take place early in the
Kentou phase, and the innovation must emerge from the best combination
of both the product and the process point of view (Figure A.15).
The industrial vision for product families developed with this method is
to build basic shared modules that can be produced in specific cells, and to
Appendix ◾ 309
have very short flexible assembly lines designed to make a variety of fin-
ished products to respond quickly to specific customer orders. Known as
mixed-model lines, they must be designed so all the models in the range
can be assembled, often without interruption, bearing in mind the following
characteristics:13
◾ Ability to react to demand

◾ Quick set-up times from one product to the next
◾ Ability to appropriately sequence the products to assemble
◾ Management of component flows
◾ Management of parallel stations.
Figure A.16 illustrates a solution adopted by one of our clients,

Husqvarna, for the assembly of grass mowers. The solution is based on two
continuous-type lines, in order to eliminate the waiting required with the
four previous synchronous lines. The flow racks permit supplying compo-
nents from just one side and are designed to accept all the models without
any adaptation.
Using prepared subgroups(kits) to reduce the differences between the
simple and the complex models helped to achieve better line balance and
Figure A.16 Mixed-model line for the assembly of grass mowers. (By kind courtesy of
Husqvarna Outdoor Products Italia S.p.A.)
310 ◾ Appendix
a simple distribution system using a tugger transport system. Resupplying

is by means of small standard quantities for all components. Using these
approaches, the facility was able to reduce the model-change time to essen-
tially zero.
Value Stream Mapping for Production

One basic and simple tool for developing a modular process is the Value
Stream Mapping; considered one of the most important—if not the most
important—tools in the Lean world, as this book has already frequently
demonstrated.
The idea is to produce a simple drawing, outlining the information flow
in the top half of a sheet of paper and the material flow in the bottom
half, and highlighting the interactions between the two flows. The value
added flow time and total flow time are then recorded at the bottom (see
Figure A.17), where the added value flow time is 9.5 minutes out of a total
of 23.62 days.
The representation of the Current State differs from traditional schemes
for studying industrial organization by facilitating the mental process for cre-
ating a Future State in a relatively brief period of time.
Improvements are achieved by eliminating all the activities with no value
added and reducing the ones that have no value added but are necessary.
Figure A.17 Value Stream Map.

Appendix ◾ 311
From the modularity point of view, there are three aspects of the Lean
approach that make it possible to achieve the Future State:
◾ The supermarket
◾ The pacemaker
◾ The FIFO (First In First Out) line.
To reduce throughput time, the Toyota Production System vision is that

the upstream process only produces what the downstream customer con-
sumes. This is similar to the principle used for restocking shelves in a super-
market. This makes it possible to always have components, and to rapidly
replenish the amount “pulled” by the customer. Setting up a pull supermar-
ket of this kind involves the planning of production in just one point of the
Value Stream, the pacemaker process, so named because it controls the pace
of all the upstream processes. Downstream of the pacemaker, the flow con-
tinues with a FIFO logic.
Coming back to our module discussion. The proliferation of variants
should occur in the same point, in order to have in the supermarket a com-
mon base of product component modules. Customization then takes place in
the remaining part of the flow as shown in Figure A.18.
Figure A.18 Highlighting of the modular process on the Value Stream Map.
312 ◾ Appendix
Steps for the Modular Development of a Product Range

Innovation based on the modular development of a product family, as
described in the previous sections, can be summarized in the chart shown
in Figure A.19. The module strategy should be an integral part of Lean
Product and Process Development (LPPD) described in this book.
We can summarize the general process at a glance as follows.
We start from the Concept Paper, derived from the research of innova-
tion, and from product range planning integrated in the document.
According to the information contained inside the document, we build
variety matrix and the mushroom of the product range to keep aligned with
the manufacturing variety funnel.
The vertical structure of the variety matrix we get with the split into
modules of the product under development by the following steps: Kentou
(Set-Based Concurrent Engineering), basic design, detailed design, industrial-
ization, etc.
In the framework of the modular methodology, the key issue is the effec-
tive collaboration of all those involved in the product design and the pro-
duction process design.
The product architecture is constructed so as to identify the widest possi-
ble product range (Figure A.20), in order to grasp opportunities and respond
to threats throughout the product’s life cycle, without the need for systemic
redesigns. It also needs to be aligned to the Concept Paper.
Applying Modularity in the Service Sector

Modularity may be adopted for intangible products and product families. In
such cases, the product domain and the process domain overlap, merging
into a single service platform.14
Figure A.19 Steps for the modular development of a product range.

Appendix ◾ 313
Figure A.20 Rolling logic of the modular development of a product family.
Modularity and the adoption of a platform approach enable service com-

panies not only to compete in the market with efficiency, quality, and pro-
duction flexibility, but also to continually and readily “create” new markets.
Designing a shared product structure in the same ways as those
described for physical products, comparable to an “open” modularity, leads
to the effective and efficient generation of a variety of services.15
The conceptual model for the modular service platform is first of all an
organizational structure not entirely visible to the customer. The client has
the perception of receiving a customized service when the service provider
has actually adopted production standardization.
Mass customization is implemented by creating standardized service mod-
ules for market segments, for example in logistical services, and combin-
ing them in various ways to enable the company to satisfy different market
demands. In any case, the customization of the service takes place at the
point of delivery (paper, electronic, email, etc.).
This is becoming a widespread trend in many service companies, where
the differentiation of the final service to the customer is obtained by skill-
fully putting together standard modules and processes, assembling them in
different ways to create a unique product for the end customer. Examples of
these can be seen in financial services (credit cards, bank accounts), insur-
ance (policies with various add-on features) and restaurants (menus with
common ingredients recombined to make a variety of entrees).
As we have seen, a well thought out module strategy for products (and
services) can dramatically reduce costs while also reducing time to market.
It also can provide customers more product choices to fit their individual
needs and grow sales. While challenging to implement at first, the long-term
benefits are clearly worth the effort.
314 ◾ Appendix
Notes
1. Co-founder and partner of Lenovys, Gianluigi Belli has wide experience in the
areas of product development, industrialization, and production. After working
for some large mechanical and aeronautical companies, he moved into consul-
tancy, working together with leading Italian and international companies. In a
career spanning over twenty years, he has successfully completed innumerable
projects with important firms in almost every industrial sector.
2. Baldwin, C.B., Clark, K.B., 1997, pp. 84–93; Calcagno, M., 1999, pp. 201–240;
Langlois, R.N., 1999.
3. Zipkin, P., 2001; Sanchez, R., Heene, A., 2001.
4. Lanzara, R., Giuliani, E., 2001.
5. Bianchi, F., Koudate, A., Shimizu, T., 1996.
6. Bianchi, F., 2002.
7. Garud, R., Kumaraswamy, A., 1995, pp. 93–110.
8. see Maskell B. and BMA Inc. Team, Lean Business Management System,
Cherry Hill, NJ, USA: BMA Publishing, September 1, 2007.
9. Ulrich K., 1995.
10. Pahl G., Beitz W., 1988.
11. Baldwin C.B., Clark K.B., 1997; Mikkola J.H., 2003, pp. 439–454.
12. Benassi M., Tunisini A., 2000.
13. See also Mansouri S.A., “A Multi-Objective Genetic Algorithm for Mixed-Model
Sequencing on JIT Assembly Lines,” International Journal of Operational
Research, 167, 2004, pp. 696–716.
14. Ulrich and Robertson (Ulrich K., Robertson D., 1998, p. 21) define the service
platform as a collection of resources shared between a variety of products.
15. Gallinaro S., 2009.
Glossary
The glossary contains the more specialist terms used in this book. For a
more in-depth treatment, or for terms not included in this glossary, further
resources are available at www.lenovys.com.
5S: Working tool and method for obtaining an organized, tidy workplace
with everything that is strictly necessary. The term refer to the first
letters of the five, transliterated Japanese words summing up the five
phases of the method: sort, setting in order, sweeping, standardizing,
and sustaining.
A3 Report: Problem-solving and coaching practice developed by Toyota.
It consists of getting a given problem, the analysis, the corrective
measures, and the action plan down onto a single sheet of A3 paper,
often making use of graphs and illustrations. It is one of the main
tools for making communication more effective and for teaching the
practice of problem-solving.
Added value activities: Activities with a value for which the customer is
willing to pay. In production, added value activities are mechanical
jobs and processes. In deciding whether an activity creates value or
not, it is fundamental to consider how the end customer perceives
it, the value that the client associates with a given activity, and value
that he or she is willing to pay for that activity.
Andon ( = lantern): Term used to refer to a visual system that highlights
the state of a process and it points out when there is an anomaly.
Typical examples are the luminous boards often found in work-
shops or production departments in order to make clearly visible
various kinds of information about the state of the system or the
production process.
315
316 ◾ Glossary
Balanced scorecard: Performance measuring technique that considers four

aspects: client satisfaction, internal productivity, innovation and con-
tinual improvement, and the financial aspect.
Benchmarking: Technique for comparing one’ s performance with that
of one’ s competitors, determining the existing gap and the reasons
for it, and using the information to improve the performance itself.
The focus of benchmarking may be strategy, a process, a method, an
operation, and so on.
Brainstorming: Group technique designed to generate as many ideas as
possible with the aim to investigate many aspects without the subse-
quent critical analysis.
Cause-effect diagram: Also known as the “ Ishikawa diagram,” after the
engineer who developed it, or the “ fishbone diagram,” because the
complete diagram resembles the skeleton of a fish. It is used for
the analysis of root causes during problem-solving, so as to explore
and illustrate the main causes and sub-causes that yield a given
effect (the problem).
Cell: Group of workstations ordered according to the sequence of the
operations of a process for continual flow production.
Checklist: Tool used to ensure that all the important phases or actions in
an operation have been done. Checklists contain elements that are
important for or relevant to a given problem or situation.
Commonality index: Measure of a sub-assembly’ s potential to realize mul-
tiple finished products.
Concept Paper: Document that contains all the useful information for
developing a new product: goals, team, market analysis, cost tar-
gets, basic trade-off curves, etc. Once approved, the Concept Paper
becomes the reference document for all the members of the product
and process development team.
Continuous improvement: Continuous improvement of products, services,
or processes through small incremental improvements and gradual
steps forward.
Corrective action: Implementation of actions to reduce or eliminate a
problem that has arisen.
Cost drivers: Elements that have a significant impact on the cost of the
product.
Cost of non-quality: Cost associated with the supply of poor-quality prod-
ucts or services. There are four categories of such costs: internal mal-
functioning costs (associated with defects found before the customer
Glossary ◾ 317
receives the product or service), external malfunctioning costs (asso-

ciated with defects found after the customer receives the product or
service), control costs (sustained in order to determine the degree of
compliance with quality requirements), and prevention costs (sustained
to keep to a minimum the costs of malfunctioning and control).
Cross-functional team: Team made up of people from all the company
departments: marketing, production, technical office, R & D, adminis-
tration, purchasing, quality, sales, etc.
Customer need: The customer’ s product or service need, to be satisfied
irrespective of the type of technology used.
Design review: Milestone in a product development process, when a proj-
ect is assessed in relation to its targets, so as to evaluate the result
of previous activities and identify problems that may have emerged
before moving on to new activities.
Engineering checklist: Set of checklists supplied to project designers with
the aim of avoiding previously made errors, using the best methods
available, facilitating the standardization of parts, facilitating the revi-
sion of a design, etc.
Evaluation matrix: Methodology used to compare different design alterna-
tives in an objective way, taking account of all the project goals at the
same time.
FMEA— Failure Mode and Effects Analysis: Method for discovering and
analyzing every potential failure mode of a system or sub-system,
determining its effect on other sub-elements and on the functionality
of the element produced.
FMECA— Failure Mode, Effects, and Criticality Analysis: Like the
FMEA, but including criticality analysis as well; this is done to cor-
relate the probability of occurrence of the various failure modes with
the severity of their consequences.
Fundoshi scheduling: Detailed scheduling of all the activities involved in
every single part or component of the product. It is a fundamental
tool for Pull Planning in projects.
Genchi Genbutsu: “ Go and see for yourself” : this is part of the Toyota
Production System, where the emphasis is placed on the importance
of gathering information personally and directly in the field, so as to
avoid errors in design and evaluation in general.
Hansei (reflection): A practice of continuous improvement. It involves
looking back, objectively evaluating results achieved, and thinking
about how a technical or organizational process can be improved.
318 ◾ Glossary
Hoshin Kanri: A fundamental tool in Lean Leadership, which focuses on

the “ management of objectives.” The main goal is to align the vision
and the objectives of the group. It is used to subdivide high-level
company objectives into objectives at operative level, enabling every-
one to grasp their contribution to the overall project.
Impact Innovation: The management framework developed by Lenovys in
order to enhance the capacity to generate innovation in the company.
It is composed of five elements: Innovation Strategy, that focus on the
customer problems to be solved through product and services; Impact
Design, the focus on the right way to develop winning product and
service; Impact Review, the focus on the way to go faster and success-
fully on the market; Innovation Governance, that focus on the com-
pany systems to manage the innovation projects in the company; and
Innovation Enablers, that focus on the way to get advantage by using
at the right time the right internal and external levers.
Jidoka: Jidoka can be described as “ automation with a human touch,”
and it consists of the automatizing of mechanical processes so that
machines are able to detect the production of defective parts and
shut down immediately until the operator intervenes. In this way, the
defect is not replicated over time. It is a quality control process used
in the Toyota Production System, which applies the following four
principles: find the abnormality and then stop, fix, and correct the
condition, investigating the causes of the error and implementing a
countermeasure.
Just in time: Production methodology introduced by the Toyota Motor
Company, whereby each workstation receives the materials it requires
from the upstream station exactly when, and in the quantity in
which, they are needed.
KAI— Key Activity Indicators: Measures that quantify the level of activi-
ties underway prior to the definite performance indicators (e.g., the
number of anomalies detected, the number of improvement teams
closed down).
Kaikaku: Radical change.
Kaizen: Literally, “ change for the better.” This is a Japanese term that
expresses the idea of continuous and overall improvement in order
to achieve ever higher standards, creating increasing value with less
waste and less effort.
Kanban: Japanese word meaning “ signboard” or “ chart.” This is a method
of communication for unblocking the movement of material when a
Glossary ◾ 319
one-piece flow is not possible. It is also a signal of the necessity for

the upstream process to produce material for the ones that follow it.
Kentou: Phase of creativity at the beginning of the product development
process. Various different conceptual alternatives are generated.
KozoKeikaku (K4): Document that brings together all the various indi-
vidual study drawings of the components. It is the design plan of the
overall vehicle, containing all the critical issues for the assembly and
the vehicle’ s system requirements.
KPI— Key Performance Indicators: The key performance measures of a
company or process.
Lead time: Time taken from the placement of an order by the customer
through to its delivery. In manufacturing, it is the time from when
the primary materials arrive to when the finished items rolls off the
production line.
Lean Leadership: Model of leadership based on the Toyota Way principles
in which the management supports the organization by creating clear
objectives, providing tools and knowledge, and removing barriers that
prevent satisfaction of customer needs, with zero waste in the whole
organization.
Lean Lifestyle®: The management framework developed by Lenovys
in order to implement the Lean Thinking as a Lifestyle. The ulti-
mate goal of the Lean Lifestyle® is to get more value with less stress
and waste of people energy, bringing at the same time well-being
and high performance in the company. It is composed of five sec-
tions: Personal Excellence, Energy, People Development, Vision, and
Lifestyle Excellence.
Lean Production: Production strategy that, compared with traditional mass
production, permits a more sparing use of resources. The focus is on
the elimination of waste and of the activities in the process that do
not have added value.
LPPD: Lean Product & Process Development.
Make or buy: Tool for comparing the cost and strategic risks with the ben-
efits of creating a product or service in-house rather than buying it
from an outside supplier.
MDT— Module Development Team: Development team responsible for a
subsystem of the vehicle, which reports to the Chief Engineers Team.
Mizen Boushi: Design process to achieve quality by making every possible
effort to design intrinsics in the process of devising countermeasures
for possible problems.
320 ◾ Glossary
Modularity: An approach to project design that breaks down a product

into smaller systems (modules) that can be created independently and
reused in different products. The main benefits of this project tech-
nique derive from the possibility of creating broad product ranges
starting from a small number of standard components. This offers
advantages in terms of production costs, flexibility, and response
time.
Muda: Waste activities that do not add value for the customer.
Mura: Waste resulting from fluctuations, variability, and a lack of leveling.
Muri: Waste generated by the overloading of a production resource or of a
person.
Nemawashi: Process that lays the foundations for the making of decisions
by slowly building consensus and giving deep consideration to all the
options. Such decisions can then be taken rapidly.
Obeya room: Large room in which the Chief Engineer and all the members
of the project team work together. Simple visual management tools
are used to display on the walls of the room the state of progress of
each sector with respect to the project targets.
OPL— One Point Lesson: Document summing up, in a simple, visual
manner, key information for training in relation to a specific, crucial
point.
Pareto diagram: Graphic technique for quantifying the impact of each
problem by means of a common measure (occurrence, severity,
downtime generated, etc.), so that efforts can be concentrated on
solving the “ few vital things,” ignoring the “ many things of little
importance.” By working on the 20% of most important things, it is
usually possible to impact on 80% of the total problem.
PDCA: An acronym for Plan-Do-Check-Act, this is the model underlying the
continuous improvement process. It consists of four phases: planning,
execution of the program, testing and checking of results, and action
to make the achieved results definitive. Also known as the Deming
cycle or wheel.
PDVSM— Product Development Value Stream Mapping: Method for
mapping the activities performed by all the working groups involved
in a product development project. Its purpose is to gain a shared
vision of risks and opportunities in a simple, visual manner.
Poka Yoke: Mistake proofing system. This design technique makes it prac-
tically impossible to produce a defective piece, even by an untrained
operator. In other words, it is a process/tool built in such a way as
Glossary ◾ 321
not to permit the generation of defects (for example, a square pin

and a round hole).
Quality Function Deployment: Structured method whereby customer
requirements are transformed into appropriate technical requirements
for each phase of the product development and production. The QFD
process can also be described as “ listening to what the customer is
saying.”
Reliability: The probability that a product will work for a certain period of
time in the conditions defined within the technical specifications.
Reworking: Work with no value added that is necessary to correct a defect
or an error that has occurred during the process.
Ringi System: Way of achieving a consensus on new ideas that are typical
of Japanese firms. It is based on wide-ranging consultation between
managers at different levels. The ideas start from the lowest levels
and work their way upward when they are approved by the level
management. Final approval is given by the top management.
Risk Assessment: Quantitative and qualitative assessment of the risks
associated with a project/idea and a known threat. The risk is quanti-
fied by calculating the size of the loss and the probability of that loss
occurring.
SBCE— Set-Based Concurrent Engineering: Expression referring to the
practice of taking many design alternatives into consideration from
the outset, moving them forward, selecting them on the basis of
emerging restrictions, and maintaining a range of solutions coherent
with the final product.
Sensei: Japanese term meaning “ teacher.” A sensei is a person with a pro-
found knowledge of the Lean system, who teaches its principles in a
business. The figure is akin to that of a coach or mentor, external or
internal, who teaches by example and by working alongside others.
SMED— Single Minute Exchange of Die: Method for changing rapidly
from one product to another in the same production process, in order
to reduce batch sizes and therefore waste.
Standardized work: Document that combines the elements of a particular
job into the most effective and waste-free sequence in order to obtain
the maximum level of efficiency in a process.
Takt Time: Relationship between the time available for delivering
the products and the volume of products to deliver in the given
time period. Takt Time represents the “ rhythm of demand,” and
hence “consequently” the delivery rate of the Lean business. As a
322 ◾ Glossary
consequence, it determines the speed at which the flow will pro-

ceed, in that it establishes every how often a product must move
from one phase to another of the production flow, so that produc-
tion and consumption are synchronized.
Throughput time: Time required by a product to proceed from the con-
cept to the launch, from order to shipment or delivery of the material
into the hands of the customer. It includes both the processing time
and the queue time.
Value Stream Mapping: Identification and graphic representation of all the
activities performed along the value stream relating to a product or
family of products.
Variety matrix: Matrix that analyzes the percentages of commonality
between the components/modules and the total of the models/ver-
sions of a product range.
VRP— Variety Reduction Program: Methodology enabling the reduction
of overall costs by rationalizing the variety of products and processes
in the design phase.
WIP— Work In Process: Items or information that are in the course of
being processed in one of the various steps.
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Index
5S, 27, 315 Lamborghini’ s adaptation of, 257–259

5 whys tool, 166 methodological steps of, 258
Bus architecture, 300
A3 Reports, 163, 315
basic principles of, 175 Callaway, 253
communication and learning with, Capacity control, 269
170–175 Carbon fiber, 251, 255–257
learning, focused on, 152 Career paths for growth, 153
into Obeya System, 174 Cassani, Pietro, 184
on problem solving, example, 173 Cause-effect diagram, 166, 316
on proposal story, example, 174 Cell, 316
ACRC, see Advanced Composite Research Checklists, 277–278, 316
Center (ACRC) Chief Engineers, 41
Added value activities, 87, 315 competencies for, 134–135
Advanced Composite Research Center coordinating and integrating
(ACRC), 259, 260 development through, 130–135
Allen, Thomas, 166 core team members, 136
Amabile, Teresa, 127 organizational model for, 131–134
Amazon, 7 project management functions, 136
Andon system, 166, 315 role in Lean Project management, 108–110
Apple, 4, 138 Churchill, Winston, 175
Apple Store, 6–7 “Circle of Ohno,” 11
Aventador, 255–257 Coaching kata, 129
Commercial innovation, 6–7
Bacon, Francis, 15 Commonality index, 274, 316
Balanced scorecard, 316 Competence, value of, 138–143
Ballé, Freddy, 125 human resources development, 140–141
BBA, see Building block approach (BBA) on job training, 140
Benchmarking, 151–152, 316 school, apprentices, and artists, 142
Bennis, Warren, 130 specialists versus generalists, 143
Bielli, Gianluigi, 263, 293 staff turnover in companies, rate of,
Brainstorming, 67, 316 141–142
Building block approach (BBA), 256, 257–259 superstars versus normal competence,
Boeing’ s, 258 142–143
327
328 ◾ Index
T models for, 138–139 Cost of non-quality, 316–317

Toyota Engineer, example, 139–140 Cost of variety, 48
training, 140 Creativity processes, 121
Concept Paper, 38–54, 40, 162, 316 Cross-functional cooperation, for new
aim of, 40 products development, 135–138
conflicting objectives, 52–53 decisions making, 137
customer needs, understanding of, 44–45 other departments and, 137–138
format, 41 Cross-functional teams, 153, 317
goals establishment, 48–50 Customer
market leader, challenge ourselves as, as center of attention, 38–54
53–54 satisfaction and product development, 39
minimum Total Life Cycle Cost, 48 value, 28, 38–39, 198–199
one goal value, 50–52 Customer need, 38, 172, 317
one product/family of products, 46–47
process owners, 41–42 Darwin, Charles, 23
product and market history, 42 Da Vinci, Leonardo, 8
product features, classification of, 43–44 De Haas, Jan, 204, 213
project team, formation of, 41 De La Bruyère, Jean, 88–90
radical sharing, 45 Deming cycle, 39
in Sacmi Ceramics, case study, 191–194 Denso case, 72–73
in Sacmi’s Closures & Containers, case De Oto, Luciano, 252
study, 219–220 Department heads, 136
single unified vision, importance of, 45–46 Design
targeted customers, 42–43 to cost, 269, 278–279
Concurrent unsynchronized activities waste, for manufacturing, 269
19–20 Design review, 110, 187, 317
Continental, case study, 229 Design structure matrix (DSM), 301–302
competitive benchmarking, 231–232 Dopamine, 91
evaluation matrix, 236–237 Drogosz, John, 84, 183
initial screening, 231–232 Druker, Peter F., 107
problem, 229–230 DSM, see Design structure matrix (DSM)
project review system, 232–236
scoping, goal setting, partner selection, Early phase of product development, 54–78
and planning, 230–231 backup solution, 70–71
solutions and conclusions, 238–239 budget limitation, 78
standardization of test activities, 232–236 convergent models for, 59–60, 61
trade-off curves, 237–238 Denso case, 72–73
Continuous improvement, 149–153, 316 existing solutions, reuse of, 63–64
Control/management costs, 296–298 forward solutions, 71
Convergent models of product development, from good product to excellent one,
59–60, 61 69–70
Convis, Gary, 128 group brainstorming, 67
Corolla, Toyota, 5 harmony, 69
Corrective action, 39, 316 iterative models for, 59–60
Cost drivers, 50, 193–194, 316 Kentou, 60–62
Cost index, 230–231 knowledge of previous critical areas,
Cost of management, 48 reuse of, 63–64
Index ◾ 329
late start, 57 level arrival of work, 94

Lean Development in, 55 minimize interruptions, 101–102
modifications in process, 77 minimize number of current activities,
Module Development Teams, 62 94–95
optimal solution under exploration of plan results and not activities, 98–99
concepts, 67–69 pull planning, 99–100
Prius case, 66–67 reduce size of activities, 95–96
problem-solving methods and tools, 73–75 FMECA, see Failure mode, effects, and
relative time, Lean versus traditional criticality analysis (FMECA)
approach, 56, 57 Ford, Henry, 5, 9
resources, use of, 56–57 Ford Motor Company, 9
set-based concurrent engineering, 61–62 Forged Composite, 253–254
simultaneous convergence of different Frontloading, 56, 269
modules, 64–65 Functional costs, 296–298
sprint start, problem of, 57–59 Fundoshi scheduling, 112, 113–114, 317
technical problem solution, 75–76 Fusfeld, Alan, 166
EDM, see Electrical discharge machining
(EDM) Gandhi, Mahatma, 149
Effectiveness, 90 Gates, Bill, 19–20, 158
Efficiency, 90 Gemba walk, 63
Einstein, Albert, 54 Genchi Gembutsu, 44, 82, 317
Electrical discharge machining (EDM), General Motors, 2, 3
229, 232 “Go, see, and touch,” Lean thinking, 44
Engineering checklist, 269, 283, 317 Godin, Seth, 55
ERWIN HYMER, 202 Google, 138
Evaluation matrix, 164, 317 Group brainstorming, 67, 316
Executive program managers, 136 Gyorgyi, Albert Szent, 78
Explicit knowledge, 150
External excess wastes, 17 Handoffs wastes, 16
Hansei, 87–88, 153, 163, 175, 317
Failure mode, effects, and criticality analysis to address organizational problems, 179
(FMECA), 317 application, 176–178
Failure mode and effects analysis (FEMA), examples, 177–178, 179–180
222, 317 versus lessons learned, 178–179
Faulkner, William, 288 for management of modifications,
Fed Ex, 7 179–180
FEM, see Finite element method (FEM) phases of, 175–176
FEMA, see Failure mode and effects in Sacmi Ceramics, case study, 187–189
analysis (FEMA) in Sacmi’s Closures & Containers, case
Ferrari, 138, 251 study, 216–219
Ferrari, Enzo, 250 workshops, 176
Finite element method (FEM), 194 Harley Davidson, 4
Fishbone diagrams, 166, 316 Herbster, Ben, 287
Flow in intellectual activities, eight Heuristic method, 301
principles of, 94, 102, 105 “hooding the sofa,” manufacturing
avoid overloading, 100 technique, 264
establish regular rhythms, 96–98 Hoshin Kanri, 129, 162–163, 318
330 ◾ Index
Human resources development, 140–141 Key deliverables, 114

Hybrid cars, 53–54 Key performance indicators (KPI), 212, 319
King, Martin Luther, 29
Impact innovation, 6–7, 264, 318 Know-how database, 117, 152, 163
Implicit knowledge, 150–151 Knowledge curve, 49
Improvement kata, 129 Koutade, Akira, 303
Innovation, 1 KozoKeikaku (K4), 319
to achieve success, 5–7 KPI, see Key performance indicators (KPI)
commercial, 6–7 Kramer, Steven, 127
in company to support people, 7 Kreos Motorhome project, 206–212
for excellence in the long-term, 2–5
investment in, 23–27 Lack of discipline wastes, 18
integrating people, processes, and Laika 500, 202
tools, 27–29 Laika project, case study
people and, 125–130 coaching, 212
processes/tools for manufacturing of goals, 203–204
products, 7 innovation and lean leadership as
product, 6 reaction to economic crisis, 201–206
systems, 23–25 Kreos Motorhome project, 206–212
wastes in processes, 12–15 next steps, 212, 213
types of, 15–20 training, 212
Inputs waste, 18 Lamborghini, case study
Interchangeability, 299 Advanced Composite Research Center,
Interruptions, of intellectual work, 22 259, 260
iPhone, 5 applied research and bold product
Ishikawa diagram, see Cause-effect diagram innovation, 250–251
Iterative model of product development, Aventador, 255–257
59–60 building block approach, 257–259
conclusions, 262–263
Jidoka, 10, 318 fiber carbon development program, 251
Jones, Daniel, 3, 80 frontal impact absorption, 254
Just in time, 10, 318 innovative processes, 260–261
Resin Transfer Molding Lambo process,
KAI, see Key activity indicator (KAI) 261–262
Kaikaku, 150, 318 Sesto Elemento, 251–254
Kaizen process, 318 Lamborghini, Ferruccio, 250
flow of, 21 Large batches waste, 19
in non-manufacturing processes, 20–21 Lead time, 20, 26, 71, 85–86, 90, 111, 217,
waste “generated,” 22–23 219, 298, 319
waste “suffered,” 22–23 Lean Accounting system, 25, 298
Kanban, 27, 318–319 Lean culture, 29–30
Kelly, Kevin, 158 Lean glasses, 9
Kentou, 55, 60–62, 319 Lean Leadership, principles of, 128–130
in Sacmi Ceramics, case study, 195–197 create aligned vision and objectives, 129
Sacmi’s Closures & Containers, case self-development, 128
study, 222–225 support daily improvement to achieve
Key activity indicator (KAI), 318 results, 129
Index ◾ 331
team development, 128–129 Leather sofa, 264

Lean Lifestyle, 90, 319 Lenovys, 80
Lean Product and Process Development Lenovys model for evaluation of suppliers, 147
(LPPD), 312, 319 Lexus, Toyota, 5, 7, 51
Lean Product development, investment in, Liker, Jeffrey, 128
23–27, 319 Long-term karmas, 38
for achievement of project objectives, 27 Lucchesi, Lorenzo, 263
advantages, 26 Luxottica, 138
continual innovation, 290
converging slowly toward final solution, The Machine That Changed the World, 10
291–292 Manufacturing pull system, 10
enthusiasm for products, 288–289 Manzoni, Alessandro, 38
expansion phase, 30 Marketplace oriented suppliers, 145
experiments, faith in, 291 Mass customization, 294–296
experts in assistance, 290–291 Material and information flow diagrams,
people integration, 27–29 80–81
pilot phase, 29–30 Material and information flow map, see
processes integration, 27–29 Value Stream Mapping (VSM)
result-oriented approach for, 290 MDTs, see Module Development Teams
scheme of, 28–29 (MDTs)
simplicity in, 289 MFD, see Modular function deployment
tools integration, 27–29 (MFD)
total time, reduction in, 26 Micro apertures, technologies for, 232
winning convictions in, 289–290 Mind set, 121
Lean Project management, 105 Mizen Boushi, 319
Chief Engineer role in, 108–110 Modular development, 293–294, 320
deadlines, 105 characteristics of, 298–300
fundoshi scheduling, 113–114 coincident product and process
project manager role in, 109–110 modularity, 306–310
project review system, 114–116 of product range, 312
project times, 105 in service sector, 312–313
pull planning into practice, real case, Modular function deployment (MFD), 301
110–112 Modular product architecture, 269
right information in right place at right design structure matrix, 301–302
time, 106–107 heuristic method for, 301
value creating management, 107–108 modular function deployment for, 301
Lean Thinking, 8–9 product and process, coincident,
activity, types of, 8 306–310
historical background of, 9–10 of single product, 300–302
Toyota model, for learning, 10–11 of whole product range, 302–303
wastes in product and innovation Module Development Teams (MDTs), 62, 319
processes, 12–15 Morgan, Jim, 63
Learning and continuous improvement, of Moscardini, Giovambattista, 202
people, 149–153 Muda, 320
big initiatives for, 150 Multitasking, myth of, 91–92
conceptual transformation, 151–153 Mura, 320
visible and invisible knowledge, 150–151 Muri, 320
332 ◾ Index
Napoleon, 164 queuing theory and intellectual

Natuzzi, case study, 263 efficiency, 92–93
company and history, 263–265 Ohno, Taiichi, 9, 11
context and challenges, 265–266 One point lesson (OPL), 320
impact/effort matrix in, 268 OPL, see One point lesson (OPL)
lessons learned from, 282–283 “Oriental karma” effect, 38
manufacturing and assembly, design for, Overuse of system waste, 19
278–279
modularity framework, 272 Package of Customer Value concept, 54
new principles, implementation phase of, Pareto diagram, 279, 288, 320
279–280 Pauling, Linus, 60
New Products Development process, PDCA, see Plan-Do-Check-Act (PDCA)
269–271 PDVSM, see Product Development Value
next challenge, 283–284 Stream Mapping (PDVSM)
operational management of industrial People, 125
platforms, 276–278 coordinating and integrating
product architecture and platforms, development through Chief
271–276 Engineer, 130–135
production checklist, 277–278 cross-functional cooperation, 135–138
project setting and starting, 266–268 in development process, 28
R & D system innovation and, 125–130
Kanban system in, 270–271 Lean Leadership, principles of, 128–130
people department, 267–268 learning and continuous improvement,
process area, 267 149–153
tools area, 268 suppliers/partners, 143–149
value area, 267 value of competence, 138–143
visual planning in, 270–271 well-being and corporate productivity,
results, 280–282 compatibility of, 126–128
Natuzzi, Pasquale, 263–264 Periodical meetings, 153
Nemawashi, 45, 133, 320 Phelps, Edmund, 4
Non-manufacturing processes, kaizen in, Plan-Do-Check-Act (PDCA), 39, 320
20–21 Platform card, example, 277
waste “generated,” 22–23 Poka Yoke, 320–321
waste “suffered,” 22–23 Pragmatic tools, 157
NUMMI, 2, 3 Prius, 66–67
Processes, 28
Obeya, 164–165, 320; see also Project room customer, as center of attention, 38–54
communication systems, 165–166 early phase of project, 54–78
importance of distances, 166–167 interpretations of, 79–80
product/project, visualization of, 169–170 Lean Project management, 105–116
room, setting up, 167–168 manufacturing of products, innovation
in Sacmi Ceramics, case study, 198 in, 7
Obstacles/interruption, Lean Innovation resource leveling in complex project,
projects, 90–102 102–105
flow in intellectual activities, eight as solutions to problems, 33–38
principles of, 94–102 analysis of problems, 34–35
multitasking, myth of, 91–92 cause and effect, 37–38
Index ◾ 333
knowledge accumulation, 35 simultaneous convergence of different

materials and information, availability modules, 64–65
of, 37 sprint start, problem of, 57–59
small signals, attention to, 35 technical problem solution, 75–76
work loads, balancing and types of, 40
synchronizing, 36–37 Product Development Value Stream
standardization and creativity, 116–121 Mapping (PDVSM), 81, 310–311, 320
Value Stream Mapping, 78–90 Product innovation, 6
without obstacles/interruption, 90–102 development value map, 12
Process owners, 41–42 wastes in, 12–15
Process standardization, 269 Production checklist, 277–278
Procrastination, 285 Productivity versus individual wellbeing,
cost of, 286–287 126–128
investing in company, 287–288 Product range planning, 305–306
Procter & Gamble, 7 Program Manager, 136
Product architecture, 300 Project manager, 41
Product development role in Lean Project management, 109–110
criteria for, 160 Project review system, 114–116
and customer satisfaction, 39 Project room, 54
early phase of, 54–78 Project team, formation of, 41
backup solution, 70–71 PSA Peugeot Citroen, case study
budget limitation, 78 conclusion, 248–250
convergent models for, 59–60, 61 introduction, 239–240
Denso case, 72–73 iterative model, 240
existing solutions, reuse of, 63–64 SBCE approach in
forward solutions, 71 alternatives, exploration of, 242–243
from good product to excellent one, backup solution, identification of,
69–70 246–247
group brainstorming, 67 brainstorming and review risky
harmony, 69 alternatives, 245–246
iterative models for, 59–60 convergence phase, 247–248
Kentou, 60–62 initialization workshop, 242–247
knowledge of previous critical areas, presentation of alternatives and
reuse of, 63–64 feedback, 243
late start, 57 quantification of remaining
Lean Development in, 55 alternatives, 244–245
modifications in process, 77 schedule and action plans for
Module Development Teams, 62 convergence phase, 246–247
optimal solution under exploration of scoping, 241
concepts, 67–69 voice of customer, clarify, 242
Prius case, 66–67 Pull planning, 99–100
problem-solving methods and tools, Pull system, 269
73–75
relative time, Lean versus traditional QFD, see Quality Function Deployment
approach, 56, 57 (QFD)
resources, use of, 56–57 Quality Function Deployment (QFD), 301, 321
set-based concurrent engineering, 61–62 Queuing theory, 92–93
334 ◾ Index
Radical sharing, 45 project review system, 221–222

Reactive state, 90 prototype, assembly of, 225–227
Redundant tasks wastes, 17 Value Stream Mapping
Reinvention wastes, 17–18 current state, 214–216
Reliability, 224, 234, 321 future state, 216–219
Resident engineers, 153 Saint Catherine, 138
Resin Transfer Molding (RTM) Lambo Salak, John Charles, 33
process, 208, 260, 261–262 Samsung, 138
Resource leveling in complex project, 102–103 SBCE-style process, 73
balancing and leveling workloads, 105 Schlumberger, 4
delegate, 105 Schwartz, Tony, 96
eight principles of fluid activities for, 105 Sectional architecture, 300
example, 103 Sensei, 15, 321
flexibility buffer for, 105 Sesto Elemento technological laboratory,
workloads between people, model for 251–254
leveling, 103–105 Set-based concurrent engineering (SBCE),
Reworking, 55, 161, 216, 283, 321 61–62, 191, 192, 230, 321
Ringi System, 321 in PSA Peugeot Citroen, case study
Risk assessment, 237, 321 alternatives, exploration of, 242–243
Rolling Stones (musical band), 105 backup solution, identification of,
Ross, Ruth, 116 246–247
Rosso, Renzo, 144 brainstorming and review risky
alternatives, 245–246
Sacmi Ceramics, case study convergence phase, 247–248
Concept Paper, project execution, initialization workshop, 242–247
191–194 presentation of alternatives and
conclusions, 199–201 feedback, 243
customer value, 198–199 quantification of remaining
hansei approach, 187–189 alternatives, 244–245
introduction, 184 schedule and action plans for
Kentou, 195–197 convergence phase, 246–247
Obeya System, 198 scoping, 241
Value Stream Mapping voice of customer, clarify, 242
analysis, 186 scoping, 241
current state, 184–187 Shook, John, 89
future state, 189–191 Short-term karmas, 38
Sacmi PH 3200 machine, 199–201 Simultaneous Engineers, 137–138
Sacmi’s Closures & Containers, case study Simultaneous unsynchronized activities
Concept Paper, 219–220 waste, 19–20
conclusions, 227–228 Single Minute Exchange of Die (SMED), 321
from efficiency to effectiveness, 220–221 Single piece cost, 48
hansei approach, 216–219 Single-point lessons (SPL), 164
kentou and design execution phases, Single unified vision, 45–46
222–225 Situation peculiarities, 29–30
machine, for cost cutting, 213–214 Six sigma framework, 73, 150
modifications, 225 Skills matrices, 153
project management, 221–222 Slot architecture, 300
Index ◾ 335
SMED, see Single Minute Exchange of Die Tools

(SMED) in development process, 28
SOP, see Standard Operating Procedure for lean and innovative company, 157–180
(SOP) for manufacturing of products, 7
Soulié, Olivier, 250 Obeya, 164–165
SPL, see Single-point lessons (SPL) communication systems, 165–166
Squidoo.com, 55 importance of distances, 166–167
Stage-Gate product development processes, product/project, visualization of,
115 169–170
Staggered release, 71 room, setting up, 167–168
Standardization, 116 pragmatic, 157
basis of, 118 selection criteria for, 158–159
of components, reuse of know-how, and integration and ease of use, 159–160
corporate profit, 120 organizational alignment, enable,
in people, 117 162–163
in processes, 117 organizational learning, assist in,
in product, 116–117 163–164
trade-off curve, data collection for, processes, support of, 160–161
118–120 standardization, reinforce, 161–162
Standardized work, 321 support people, 161
Standard Operating Procedure (SOP), 164 self-reflection, 175–180
Stop and Go process, 37 simplify communication and learning
Stop and Go wastes, 17 with A3, 170–175
Supplier know-how exchanges, 151 Toyoda, Eiji, 133
Suppliers/partners, 143–149 Toyoda, Kiichiro, 10
categories of, 145–146 Toyota, 2–3, 138
evaluation, 146–149 Toyota Production System (TPS), 3, 9–10
aptitude for improvement, 148 The Toyota Way, 2, 133
for complementarity, 148 TPS, see Toyota Production System
for speed, 148 Trade-off curves, 49, 50, 70, 117, 118
for uniqueness, 148 for choice of wheel solution, 224
for willingness to invest, 148 data collection for, 118–120
selection of, 144–145 example of, 194, 197
Suzue, Toshio, 303 Transactions wastes, 17
Suzuki, Ichiro, 133, 134 Tzu, Lao, 285
System Integrator, 136
Systems, 23–25 Uchiyamada, Takeshi, 164
individual versus company, 24
Value Stream, 15–16
Tacit knowledge, 150–151 Value Stream Mapping (VSM), 21,
Takt time, 321–322 78–90, 322
Tannen, Deborah, 135 modular process on, 310–311
Team leader, 108–109 in practice, 83–86
Teardown, 151–152 for production, 81, 310–311
Throughput time, 271, 311, 322 in Sacmi Ceramics, case study, 184–191
T models, for competencies and career in Sacmi’s Closures & Containers, case
development, 138–139 study, 214–219
336 ◾ Index
steps of, 86–88 large batches, 19

tried and tested solutions, 88–90 overuse of system, 19
Variability of processes wastes, 18 in product, 12–15
Variable costs, 296–298 in production versus office, 20
Variety matrix, 272, 302–303, 312, 322 redundant tasks, 17
Variety Reduction Program (VRP), reinvention, 17–18
303–305, 322 simultaneous/concurrent unsynchronized
Vendor ratings, 146 activities, 19–20
VRP, see Variety Reduction stop and go, 17
Program (VRP) suffered, 22–23
VSM, see Value Stream Mapping (VSM) transactions, 17
variability of processes and inputs, 18
Waiting times wastes, 17 waiting times, 17
Ward, Allen, 107 Well-being of people versus productivity,
Wastes 126–128
external excess, 17 WIP, see Work in process (WIP)
forms of, 11 WIP caps, 95
generated, 22–23 Wishful thinking, 34
handoffs, 16 Womack, Jim, 3, 80
in innovation processes, 12–15 Work in process (WIP), 100, 322
types, 15–20
lack of discipline, 18 Yutani, Masaaky, 8

Lean Development and Innovation Hitting The Market With The Right Products at The Right Time by Luciano Attolico

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Lean Development and

A PRODUCTIVITY PRESS BOOK

© 2019 by Luciano Attolico

No claim to original U.S. Government works

Printed on acid-free paper

International Standard Book Number-13: 978-1-138-48183-1 (Hardback)

Library of Congress Cataloging-in-Publication Data

Names: Attolico, Luciano, author.

Visit the Taylor & Francis Web site at

2.3.11 What Happens if the Solutions Are Incompatible

2.7 Lean Project Management: The Art of Surfing Applied

3.3.1 Who Makes the Decisions? ..................................................137

4.3.1 Summary of the Basic Principles of an A3 Report ............. 175

5 Companies That Have Successfully Streamlined and

5.3.8 Modifications: Are We Sure We Know the Causes? .........225

5.7 The Natuzzi Case—Relaunching a Company Starting from

My original study of Japanese automakers back in 1983 focused on sup-

So what does creative innovation have to do with standardization and

need well-defined processes, well-defined timelines, clear roles and respon-

Jeffrey K. Liker, PhD

My passion has been to build an enduring company where peo-

After my university years, armed with a degree in mechanical engi-

Why this book, then? Another book on Lean Management?

Chapter 1—Lean Product-Process Innovation and Long-Term

Chapter 5—Companies That Have Successfully Streamlined and

I appreciate the courage and support of Jan De Haas of Laika, whom

After a Master’s Degree with honors in Mechanical Engineering, Luciano

Luciano has developed the Lean Lifestyle® approach, a management

We often underestimate the impact that innovation in the products or

1.1 A Strategic Question: Excellence in the

In fact, this is a paradox, because it is essentially thanks to American and

to spend hundreds of thousands of dollars in post-production fixes and

increasing investment in product innovation and in R & D, instead of stop-

1.2 Innovating to Achieve Success

potential customer becomes a user who can experience products,

Unfortunately, innovation alone does not guarantee success. Many com-

1.3 From Lean Management to the Lean Development

1.3.1 Lean Thinking

1.3.2 Historical Background of Lean Thinking

1.3.3 What Can We Learn from the Toyota Model?

1. Overproduction: the worst waste of all, when you produce something

product in order to obtain new cash to be reinvested: this concept is fully

1.3.4 Wastes in Product and Innovation Processes

20% of the total time spent in product development in a typical company is

1.4 Types of Waste in the Innovation Process

You can summarize the causes of waste in major categories, just as

creativity with reinventing something? Instead of worrying about invent-

10. Overuse of the System

a waiting problem that a person or a department is forced to endure,

1.5 Process Kaizen in Non-Manufacturing Processes

Figure 1.5 Typical flow of process kaizen.

improvements and “local” optimizations inspired by the good principles of

1.5.1 Waste “Suffered” and Waste “Generated”

Sending on a “miscommunication,” for example, is another fact that should

1.6 Why Invest in a Lean Development

The opportunities for improvements in product and process innovation

Figure 1.9 Level of achievement of project objectives for different companies.

shown to be valid for a statistically representative sample of other compa-

1.6.1 Integrating People, Processes, and Tools

1. Customer Value: Define what you want to offer, distinguish yourself,

Figure 1.10 Scheme of the Lean system in the product development.

1.7 Each Situation Has Its Own Peculiarities

simulations we do in all our Lean training sessions outside the company